DLF net dips 4.8 per cent on higher land costs

Sharp increases in the cost of land and development rights pulled down the net profit of DLF, the country’s largest property developer, by 4.8 per cent in the September quarter of 2010-11 as compared with the corresponding quarter of the previous financial year

DLF posted a net profit of Rs 418.4 crore for the quarter, as compared to Rs 439.7 crore in the corresponding period. The net profit numbers were almost in line with analyst expectations.

However, net sales were up 35 per cent in the quarter, at Rs 2,369 crore as compared to Rs 1750.9 crore in the September quarter of 2009-2010.

The cost of land, constructed properties and development rights acquired rose two-fold in quarter to Rs 808 crore, compared to the Rs 384.3 crore it spent in the same period of 2009-10.

“The company is concerned with the recent sharp increases in commodity prices, which could have an adverse impact on construction costs. Whilst in the near term the company expects the current pricing trends to help sustain the margins, it is keeping a watchful eye on future trends and its impact,’’ DLF said in a statement

Ebitda (earnings before interest, taxes, depreciation and amortisation) margins fell to 49 per cent in the second quarter, compared to the June quarter. “The decline is a temporary step. We expect our annual Ebitda to be in the 45-50 per cent range,’’ the company said.

DLF sold non-core assets worth Rs 413 crore during the quarter. It leased 1.56 million sq ft of properties and booked sales of 2.08 million sq ft during the quarter. It had 57 million sq ft of projects under development during the end of the quarter.

“The company expects its strategy of pan-India offerings of residential products shall yield good returns in the future. The commercial office and retail segment continues to show improvement, given the GDP growth,” it said.