Majid Al Futtaim 2022 earnings climb 4% on revenue boost despite global challenges

Company’s income from property unit surges 43 per cent on robust performance across its hotels and communities’ businesses

Majid Al Futtaim said footfall in its malls rose 16 per cent to 212 million visitors last year. Reem Mohammed / The National

Majid Al Futtaim Holding, one of Dubai's biggest private sector companies and the Middle East's largest mall operator, reported an increase of 4 per cent in last year's earnings as revenue rose despite global economic headwinds and rising inflation.

Earnings before interest, taxes, depreciation and amortisation (ebitda) for the 12 months to the end of December climbed to Dh4.1 billion ($1.12 billion), the company said in a statement on Monday.

The privately held conglomerate said the “group's solid operational performance” as well as income from its properties business drove revenue 12 per cent higher on an annual basis to Dh36.3 billion.

Net profit for the reporting period declined 2 per cent to Dh2.4 billion.

The company said its balance sheet remained strong, with assets up 9 per cent year-on-year to approximately Dh66 billion.

"Overall, Majid Al Futtaim delivered balanced growth through 2022," said Ahmed Ismail, chief executive of Majid Al Futtaim Holding.

"Positive contributions from across our portfolio, bolstered by the inherent strength of the UAE economy, have enabled the group to achieve double-digital revenue growth despite the ongoing macroeconomic challenges.

“The potential impact of these headwinds has been further lessened by the outstanding performance of our properties portfolio, which has contributed 74 per cent of total ebitda.”

The retail industry, which was severely affected during pandemic lockdowns, bounced back strongly in 2021 and has maintained its growth momentum since.

Consumer spending in the UAE increased 22 per cent in the first half of last year, despite a rise in fuel costs and higher inflation, Majid Al Futtaim said in its State of the UAE Retail Economy report in August.

Spending on retail items grew 16 per cent and on non-retail goods rose 31 per cent in the same period, it said.

The economic rebound of the UAE, the Arab world’s second-largest economy, and its booming travel and tourism sector have bucked weaker global economic trends, supporting the growth momentum in the retail sector.

The UAE economy is estimated to have grown by 7.6 per cent last year, the highest in 11 years, driven by the oil and non-oil sectors, after expanding by 3.8 per cent in 2021, the UAE Central Bank said.

It is projected to grow 3.9 per cent this year, the regulator has forecast.

First Abu Dhabi Bank forecasts hydrocarbon and non-hydrocarbon real gross domestic product growth of 5.4 per cent and 4.7 per cent, respectively, for the UAE economy this year.

Emirates NBD expects the UAE's GDP to grow by 3.9 per cent in the year.

Majid Al Futtaim said the company had “solid financial standing” and it remained “fully committed to delivering value-accretive” profitable growth for its shareholders.

The company’s revenue from its property division surged by 43 per cent to Dh5.8 billion, driven by robust performance across its hotels and communities’ businesses.

The shopping-mall segment was boosted by “the full-year impact” of City Centre Al Zahia in Sharjah and Mall of Oman in Muscat, as overall mall footfall for the group increased 16 per cent to 212 million visitors.

The company’s hotels portfolio revenue increased 48 per cent to Dh671 million, in part boosted by Expo 2020 Dubai. Revenue per available room and average occupancy increased by 50 per cent and 14 per cent, respectively, last year.

Majid Al Futtaim’s retail business reported a 7 per cent increase in revenue to Dh28 billion last year, driven by “renewed consumer confidence, easing of Covid-19 restrictions and rebound in travel and tourism in countries where Majid Al Futtaim operates”, it said.

The group expanded its presence in the region, opening seven hypermarkets and 28 supermarkets across nine countries that pushed the total number of its stores to more than 450.

The company’s entertainment business revenue increased 23 per cent to Dh1.6 billion, while ebitda grew 68 per cent Dh126 million.

The signing of distribution rights with Warner Bros. Pictures, which was followed by securing distribution rights for Universal in 14 countries in the Mena region, is expected to fuel further growth for the business, it said.

Majid Al Futtaim Lifestyle reported revenue of Dh801 million, a 38 per cent year-on-year jump, which the company said was driven by a strong performance across its brands.

Looking ahead, the company plans further expansion in “high growth potential markets such as Saudi Arabia and Egypt, as well as in its home market, the UAE, amid a resurgence in consumer confidence”, it said.

“The group will also continue to invest and expand its omnichannel presence, to ensure the business is future-proof and is delivering on the changing customer needs."

Majid Al Futtaim, which had net borrowings of Dh14.2 billion at the end of last year, said it continues to maintain a strong financial and liquidity position and its debt maturity profile remains “balanced”, with a mix of capital markets and bank financing.