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RIYADH, Jan 8 (Reuters) - Saudi Arabia’s largest real estate company, Dar al Arkan, said its fourth-quarter net profit halved from the same time the year before as finance costs rose and property sales generated lower margins.
Net income for the three months ending Dec. 31 was 144 million riyals ($38.4 million) versus 290 million riyals in the prior-year period. Gross profit in the quarter fell by 10.2 percent, the company said in a bourse statement on Tuesday.
Saudi Arabia’s real estate market is on the brink of significant change as the government moves to increase home ownership by regulating mortgage lending and building half a million houses.
Dar said its lower gross margins on property sales were “attributable to the geographical location of the properties”.
In the past, much of its profit has come from selling land in Saudi Arabia and it has said it is working on a plan to diversify revenue sources in order to stabilise its income.
It also cited higher operating expenses and finance charges and lower non-operative income for the fall in profit.
The company said in November it had outstanding debt of around 4.4 billion riyals, with sukuk of 750 million riyals and 1.69 billion riyals maturing in May 2014 and February 2015 respectively.
It also has short-term murabaha Islamic loans with local and international banks, which it plans to roll over.
Net profit for 2012 was 989 million riyals, a fall of 9.1 percent from 2011. (Reporting by Angus McDowall and Praveen Menon; Editing by Mark Potter)