Palm Hills’ net income rises 44% in 1Q 2022
Palm Hills Developments’ (PHD) bottom line surged 44% y-o-y in 1Q 2022, driven by a strong increase in sales, the real estate developer said in its latest earnings release (pdf). The company reported net income of EGP 295 mn, supported by a 47% increase in revenues which reached EGP 2.9 bn during the January-March period, reflecting increased past sales of primary and secondary homes as well as commercial units.
New sales in 1Q 2022 grew 62% y-o-y to EGP 5.5 bn during the quarter, driven by an increase in average selling prices and a steep rise in volumes, which almost doubled from 1Q 2021. Sales of residential property grew 63% to EGP 4.7 bn, while commercial property sales were up 59% to EGP 853 mn. PHD’s Badya project in Sixth of October accounted for 41% of its residential sales, more than quadrupling to EGP 1.9 bn during the three-month period.
SOUND SMART- In real estate, sales ≠ revenues. Real estate companies book a sale when you sign a contract to buy a home. But they only record (some or all) of the value of the unit it sold you when it (a) delivers the unit to you or (b) hits a percentage completion on a total project. So revenues are composed of sales from past periods, while sales in a given quarter will be recognized as revenues in the future when units are completed or delivered.
The company is confident it will maintain growth through the current economic headwinds: “Real Estate has always been and will continue to be a primary hedging tool against inflation even during periods with attractive interest rates,” Executive Chairman Yasseen Mansour said. The company will continue to ramp up construction spending to counter potential cost inflation and plans to deliver more than 500 units in Badya this year.