Majid Al Futtaim Holding, one of Dubai's biggest private sector companies and the Middle East's largest mall operator, reported a sharp rise in profit and revenue on the back of the robust economic momentum of its UAE home market.
Net profit for the six-month period to the end of the June soared an annual 74 per cent to Dh1.7 billion ($463 million) from the same period a year ago, while revenue for the reporting period climbed 5 per cent to Dh18.9 billion, Ahmed Ismail, chief executive at Majid Al Futtaim, said on Monday.
Earnings before interest, taxes, depreciation and amortisation for the first half of this year climbed 13 per cent to Dh2.1 billion.
“The year is off to a good start, revenue is up 5 per cent despite currency devaluations in several markets in which we operate,” Mr Ismail said in a Bloomberg TV interview.
“More pleasing is the fact that our profitability is growing ahead of our revenue” on the back of “a buoyant economy in our home market of the UAE”, he said.
The UAE's economy, the Arab world's second-largest, rebounded strongly last year from the slowdown caused by Covid-19, with growth momentum extending into 2023. It grew an annual 3.8 per cent in the first quarter of this year after a 7.9 per cent expansion in 2022, boosted by a sharp growth in the non-oil sector as it continues to push for diversification.
Gross domestic product in the three months to the end of March increased to Dh418.3 billion, with most sectors and economic activities that serve as “the key pillars of the national economy made significant contributions”, Abdulla bin Touq, Minister of Economy said earlier this month, quoting the Federal Centre for Competitiveness and Statistics data.
Non-oil GDP rose 4.5 per cent year on year to Dh312 billion.
The privately held conglomerate, whose business interests span from retail and leisure sectors to property development, owns and operates 29 shopping malls, 18 hotels and mixed-use communities.
Profitability during the reporting period was driven by “multiple factors” including reallocation of capital to more profitable and higher margin segments of the business.
“Our residential [properties] business has posted record results, in fact, our total properties business has delivered another set of record, with 40 per cent growth in revenue and 22 per cent growth in ebitda. Part of it naturally is operational efficiency and financial discipline,” Mr Ismail told Bloomberg.
Dubai residential prices were nominally below their previous peak and the company is planning a new development by the end of the year, he said.
The property market in the UAE, one of the main drivers of the country's non-oil economy, has also carried growth momentum forward into 2023 after sharp increases in the past two years.
Government measures including residency permits for retired people and remote workers, as well as the move to expand the 10-year golden visa programme and business gains on the back of Expo 2020 Dubai have driven the sector's growth.
The property market registered strong performance across all sectors in the first half of the year, despite global macroeconomic headwinds, Consultancy CBRE said in a report in July.
Abu Dhabi's market recorded 4,737 sales transactions in the first half of the year, up 88.6 per cent annually, while average prices in Dubai's market rose by 16.9 per cent in the year to June 2023, CBRE said.
Majid Al Futtaim said revenue for the company's property business rose 39 per cent to Dh3.4 billion, while ebitda climbed 22 per cent to Dh1.7 billion, primarily driven by UAE-based shopping malls and the Tilal Al Ghaf residential property development.
The property business was the biggest contributor to the company's revenue and profit growth in the reporting period, it said in its financial statement, posted on Nasdaq Dubai.
Shopping mall footfall increased by 12 per cent, with the Mall of the Emirates recording its highest ever first-half footfall. Tenant sales grew by 7 per cent, with the company's UAE-based malls making the largest contribution to revenue.
The retail business, however, reported a 2 per cent drop in revenue to Dh14.1 billion, with ebitda during the first half dipping 7 per cent, “driven primarily by the impact of currency devaluations across the group’s footprint”, the company said in a statement on Monday.
At a constant currency rate, revenue grew 8 per cent and ebitda increased 5 per cent.
The company, which opened five new stores in the region during the first half, said its digital retail business remained strong, with a 13 per cent increase in revenue to Dh1.2 billion.
Revenue for Majid Al Futtaim's entertainment business rose 4 per cent annually to Dh822 million as the cinema business continues to recover from “delays and adjustments to its content pipeline”.
The company has expanded the footprint of its entertainment business in the first half with the opening of Snow Abu Dhabi in June, the group’s fourth snow destination in the region.
Its lifestyle businesses recorded 31 per cent rise in revenue to Dh473 million as it opened 11 new stores in the first six months of the year.
Majid Al Futtaim's net borrowings at the end of the first half reached Dh15 billion, with most of the debt maturing 2026 onwards, as to maintains “a strong financial and liquidity position backed by a well-balanced financing mix encompassing capital markets and bank financing”, it said.
In May, the company raised $500 million through a green sukuk, its fourth in about four years, as it continues to diversify its funding base.
The company will use the proceeds to refinance an older $800 million bond commitment, it said at the time.
