- 15
- Dec.
- 2023
Solidere: Losses of 11.1 Million Dollars in 2022
modified on 07 Oct. 2024 à 16:46 Read : 3 minute(s) A A A
Solidere recorded losses of $11.1 million in 2022, compared to $21.5 million in 2021. However, its stock price remains stable on the Beirut Stock Exchange.
According to the audited financial report, losses of the Lebanese Company for the Development and Reconstruction of Beirut Central District (Solidere) decreased in 2022 by $10.4 million, dropping from $21.5 million in 2021 to $11.1 million in 2022. Nonetheless, the losses totaled $5.2 million in the consolidated financial results of 2022.
The losses are attributed to the continuous decline in real estate sales due to the ongoing economic deterioration in the region in general, and particularly in Lebanon. Moreover, fluctuations in exchange rates had an impact on the calculation of financial results.
Solidere's total assets in Lebanon amounted to $1.81 billion in December 2022, down from $1.85 billion in 2021, while total liabilities amounted to $191.75 million in December 2022, compared to $216.61 million in December 2021. Additionally, shareholders' equity totaled $1.62 billion at the end of 2022, versus $1.63 billion in 2021.
Real Estate Sales
Real estate sales revenue amounted to $55.61 million, down from $85.2 million in 2021 by $29.59 million. On the other hand, rental income increased in 2022, reaching $31.4 million, despite the closure of most commercial companies in downtown Beirut.
Solidere maintains strong liquidity, standing at $62.2 million at the end of 2022, and has no outstanding loans or other banking facilities. Furthermore, financial data shows that the company generated a net value of $5.9 million from its operating activities in sales and leasing, excluding provisions and other charges.
Expense Reduction
Solidere continued its expense reduction strategy, focusing on reducing operational and administrative costs, significantly reducing the number of employees from 441 at the end of 2021 to 219 at the end of 2022.
However, due to salary adjustments and severance pay for employees, administrative costs increased to $40.7 million in 2022.
It's important to note that the multiple exchange rates in the Lebanese market weigh on the company's balance sheet. Unifying exchange rates under the 2024 budget law would align the company's financial data with international standards.
Solidere's Stock Performance
Out of 24 shares belonging to ten companies listed on the Beirut Stock Exchange, only Solidere's, in categories A and B, along with Ciment Blanc and Holcim, have withstood the crisis since October 2019, with most trading activities focused on Solidere's shares. From the fourth quarter of 2019, stock transactions, with reduced volumes, have been conducted in bank checks, i.e., in "lollars."
In practice, large bank account holders rushed to buy Solidere shares, considering it safer to withdraw their "lollars" from banks and invest them in the real estate-backed value that Solidere represents.
Those who acquired Solidere shares before the crisis would have preserved their capital and might have even generated some gains.
If we calculate the stock's value in 2019 at approximately $6 against 78 "lollars" (as of Thursday, December 14, 2023), it translates to about $11 at the market exchange rate of roughly 90,000 Lebanese pounds per dollar.
Market Capitalization
Since the onset of the crisis in October 2019, the value of transactions on the Beirut Stock Exchange declined before showing signs of improvement in 2020, increasing from an annual pace of $242 million to $487 million to date. This figure could reach half a billion dollars by year-end. This occurs in a context of decreased transaction volumes, dropping from $49.9 million in 2020 to $34.6 million to date.
As for market capitalization, it was nearly $10 billion before the 2019 crisis, whereas today, it stands at 17 billion "lollars," approximately $2.6 billion.
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