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UAE Poultry Company Invests in Real Estate

by 5m Editor
6 May 2009, at 9:10am

UNITED ARAB EMIRATES - With profits from poultry production under pressure, Ras Al Khaimah Poultry and Feeding is investing in property.

With profit margins from the poultry business under pressure, a leading poultry company in the country is trying its hand at real estate investments to boost its bottom line, according to Emirates Business.

Ras Al Khaimah Poultry and Feeding is investing 30 million dirham (AED) in a new building in the northern emirate's Nakheel area, said General Manager, Mohammed Ali Noosh.

Mr Noosh believes investments in real estate are still attractive in the UAE. While income from its main business has been dwindling, the company – one of the largest poultry producers in the UAE – is trying to compensate for the decline in revenue with investments in non-core areas like real estate. The company has been engaged in the poultry business for the past 25 years.

"Last year, out of a total profit of AED 57 million, the revenue from poultry sales was only AED 7 million because of the rise in the prices of animal feed and diesel," Mr Noosh said. "Our investment income [from stocks and shares] was more than AED 45 million. In the first quarter of 2009, total revenues have come down when compared to the year before due to the fall in both poultry sales and investment income.

"The poultry business in the UAE came under pressure because raw material and diesel prices were high. Now that those prices have fallen, officials are pressurising us to reduce poultry prices. Other poultry companies are also under pressure because of these reasons."

Mr Noosh said the company produced five million broiler chicken last year and 16 million eggs. He said the company's investment income was about AED 83 million in 2007 when the stock markets were doing well.

He said the company is bullish about the long-term prospects of real estate in the UAE, and uninterrupted revenue from a multi-storey building it already owns in Ras Al Khaimah is driving it to build a new one in the emirate's Nakheel area now.

"We have liquidity and there is no point in putting our surplus cash in the bank to earn just a small interest. Power shortages in RAK are also holding back our investment plans in poultry," Mr Noosh said.

The company has placed a part of its surplus funds in banks, earning seven to eight per cent interest. It also earns dividends from its shares in a bank and other companies.

The firm has constructed refrigerated stores to preserve its production in the third industrial zone in Sharjah, reports to Emirates Business.