Kingdom Centre, home to Kingdom Holding, in Riyadh.
Prince Alwaleed bin Talal's investment company is getting richer on paper but earning less. A rocket company has inflated the value of its holdings while its hotels are costing more to run.
Kingdom Holding's third-quarter profit fell 62% to about SR304 million ($81 million), according to its filing on Tadawul. It made nearly SR795 million in the same quarter last year. It's the third quarter in a row that profit has fallen.
Why profit fell: hotel running costs, interest payments, taxes and zakat all went up. Last year's quarter was also flattered by a one-off accounting gain on one of its investments.
Revenue still grew: sales rose 36% to about SR850 million, helped by more hotel business and higher dividends from its holdings.
The SpaceX effect: the value of its investment portfolio is up 17% this year to about SR46 billion, mainly because SpaceX shares were listed. Kingdom Holding's SpaceX stake was worth more than SR27 billion after the Nasdaq debut. That increase shows up in the company's net worth, not in its profit.
A football club on the books: Kingdom Holding completed its SR840 million purchase of 70% of Al Hilal from the Public Investment Fund around the start of September, so the club counted for only about a month of the quarter. Its full effect will show in the fourth-quarter results.
Nine-month picture: profit for the year so far is down 44% to about SR906 million. Over the same period, the company paid shareholders nearly SR1.8 billion in dividends.
What to watch: whether higher hotel revenue starts to keep pace with the costs. The other question is whether the company sells any SpaceX shares to turn the paper gain into cash.
