Property recovery helps company cut debt and boost revenues
Dubai Holding, the conglomerate that owns hotel chain Jumeirah Group, has announced a 178 per cent increase in net profits in 2013 and continues to reduce its debt obligations.
The conglomerate is one of many Dubai companies that accrued billions of dollars in debt in the run-up to the financial crisis in 2009, and has been working to repay its obligations over the past five years.
Dubai Holdings total net profits increased to AED3.3bn ($898.4m) last year, while total revenues increased by 27 per cent to AED11.6bn year-on-year.
It has reduced its total debt by AED753m, from AED11.7bn in 2012 to about AED11bn. This has helped reduce its debt equity ratio to 0.6, which is considered within industry norms.
The company repaid its J¥10bn ($97.3m) bond last year along with other maturing debts of AED1.5bn and contractor liability settlements of AED2.5bn.
Dubai Holding has continued to clear its debts in 2014, having repaid its 750m bond ($1bn) on 30 January 2014. It has one UK sterling bond outstanding and due in 2017.
It is thought that a $1.4bn syndicated loan raised by Jumeirah Group towards the end of 2013 was used by Dubai Holdings to repay the euro-denominated bond earlier this year, as well as for other general corporate purposes.
The closing of this syndicated loan was taken as a sign of Dubai Holdings ability to meet its debt obligations and led to US ratings agency Moodys Investors Service upgrading the companys rating to B1 from B2.
The firms improved profits have been fuelled by revenues from its hospitality, leasing, facilities and property management businesses, which have grown by 10.7 per cent to reach AED6.9bn.
Recovery in Dubais real estate sector has been driving property and land sales, which have contributed AED4.7bn to the companys total revenues.
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