Majid Al Futtaim, the Middle East's largest mall-operator, said full year 2020 earnings fell 19 per cent as movement restrictions to stem the spread of Covid-19 affected revenue of the group's divisions.
The Dubai-based company's earnings before interest, tax, depreciation and amortisation (ebitda) fell to Dh3.8 billion as revenue slid 7 per cent to Dh32.6bn. The company, which operates 27 malls across the Gulf, Levant and North Africa is not publicly listed but discloses its earnings.
The retail side of the business saw "a surge" during the early days of the pandemic as did demand for electronics "where people were preparing or equipping themselves to work remotely", chief executive Alain Bejjani told The National. There was also an initial surge in demand for home gym equipment, but this subsequently subsided.
"Once you buy your laptop, your table, your camera, you're done – you're not going to get that every week."
Online sales surged 118 per cent year-on-year and were 700 per cent higher at the height of movement restrictions. The company's online grocery retail revenue broke through the Dh1bn barrier last year, or 3 per cent of total revenue.
"The pandemic has accelerated the trend. This is something we expect to be sustained and grow even further – 2021, in my opinion, we're going to be somewhere around doubling that and tripling that in 2022," Mr Bejjani said.
Overall, though, retail revenue for its Carrefour retail business was 1 per cent lower at Dh28bn while ebitda grew 14 per cent to Dh1.6bn.
The company has been building a "backbone" of digital and logistics capabilities since 2015 and either opened or converted units into 117 new fulfilment centres last year.
"It is extremely important to actually develop in-house capabilities because this is not a one-off ... this is how business is going to be going forward," Mr Bejjani said. It has invested a lot in partnerships to develop in-house capabilities and has also acquired companies.
"We definitely are open and looking always to the right opportunity to invest in or acquire new capabilities that could add to what we have," he added.
The Covid-19 pandemic led to movement restrictions that included the temporary closure of some of its properties, cinemas and entertainment centres. This led to a 24 per cent decline in revenue at its properties business to Dh3.5bn and a 21 per cent fall in ebitda to Dh2.3bn, as revenue payments from tenants were halted during closures and it extended rent relief mechanisms.
Its hotels arm witnessed a 60 per cent drop in occupancy rates as many properties were temporarily closed and demand fell due to fewer tourist arrivals.
The greatest fallout came in its Ventures division, which includes the Vox Cinemas business and entertainment centres that were closed for "prolonged" periods. Its revenue fell 49 per cent to Dh1.4bn and ebitda dropped 122 per cent to minus Dh92 million.
Majid Al Futtaim cut capital expenditure by 45 per cent last year to maintain financial discipline and paid down Dh400m of debt to end the year with net debt of Dh12.4bn.
"We are currently at 40 months, or three years-plus of liquidity ahead of us. And we also look ... at the financial landscape and make sure our obligations are smooth in order to be able to always operate in a stress-tested environment," Mr Bejjani said.
"This does not mean whenever we see an opportunity to expand we wouldn't do it – within the confines of our [BBB] credit rating," he said.
The company operates in 17 international markets employing more than 43,000 people and its retail arm is considering entry into new markets in East Africa and Central Asia, Mr Bejjani said.
It is also due to open the City Centre Al Zahia Mall in Sharjah next month and the Mall of Oman later this year and is in the "late design stages" of Mall of Saudi, a 14bn Saudi riyal ($3.7bn) project first announced in 2016.
Mr Bejjani was unable to give a timetable for its delivery but said "the tenant mix is definitely changing".
"We're very fortunate in a way that the pandemic accelerated certain trends. We're definitely re-looking and optimising and making sure the design is one that can cater even more for a broader, richer and more fulfilling customer experience," he said.
Company%20Profile
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The five pillars of Islam
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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Ballon d’Or shortlists
Men
Sadio Mane (Senegal/Liverpool), Sergio Aguero (Aregentina/Manchester City), Frenkie de Jong (Netherlans/Barcelona), Hugo Lloris (France/Tottenham), Dusan Tadic (Serbia/Ajax), Kylian Mbappe (France/PSG), Trent Alexander-Arnold (England/Liverpool), Donny van de Beek (Netherlands/Ajax), Pierre-Emerick Aubameyang (Gabon/Arsenal), Marc-Andre ter Stegen (Germany/Barcelona), Cristiano Ronaldo (Portugal/Juventus), Alisson (Brazil/Liverpool), Matthijs de Ligt (Netherlands/Juventus), Karim Benzema (France/Real Madrid), Georginio Wijnaldum (Netherlands/Liverpool), Virgil van Dijk (Netherlands/Liverpool), Bernardo Silva (Portugal/Manchester City), Son Heung-min (South Korea/Tottenham), Robert Lewandowski (Poland/Bayern Munich), Roberto Firmino (Brazil/Liverpool), Lionel Messi (Argentina/Barcelona), Riyad Mahrez (Algeria/Manchester City), Kevin De Bruyne (Belgium/Manchester City), Kalidou Koulibaly (Senegal/Napoli), Antoine Griezmann (France/Barcelona), Mohamed Salah (Egypt/Liverpool), Eden Hazard (BEL/Real Madrid), Marquinhos (Brazil/Paris-SG), Raheem Sterling (Eengland/Manchester City), Joao Félix(Portugal/Atletico Madrid)
Women
Sam Kerr (Austria/Chelsea), Ellen White (England/Manchester City), Nilla Fischer (Sweden/Linkopings), Amandine Henry (France/Lyon), Lucy Bronze(England/Lyon), Alex Morgan (USA/Orlando Pride), Vivianne Miedema (Netherlands/Arsenal), Dzsenifer Marozsan (Germany/Lyon), Pernille Harder (Denmark/Wolfsburg), Sarah Bouhaddi (France/Lyon), Megan Rapinoe (USA/Reign FC), Lieke Martens (Netherlands/Barcelona), Sari van Veenendal (Netherlands/Atletico Madrid), Wendie Renard (France/Lyon), Rose Lavelle(USA/Washington Spirit), Marta (Brazil/Orlando Pride), Ada Hegerberg (Norway/Lyon), Kosovare Asllani (Sweden/CD Tacon), Sofia Jakobsson (Sweden/CD Tacon), Tobin Heath (USA/Portland Thorns)
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
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Jetour T1 specs
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Company profile
Company name: Dharma
Date started: 2018
Founders: Charaf El Mansouri, Nisma Benani, Leah Howe
Based: Abu Dhabi
Sector: TravelTech
Funding stage: Pre-series A
Investors: Convivialite Ventures, BY Partners, Shorooq Partners, L& Ventures, Flat6Labs