Majid Al Futtaim says profit up 12% despite global economic uncertainties

While its property business soared, the company recorded a dip in revenue for retail operations

Majid Al Futtaim is the largest operator of shopping malls in the Middle East and also has property developments. Photo: Majid Al Futtaim

Majid Al Futtaim, one of Dubai's biggest private sector companies and the Middle East's largest mall operator, reported a 12 per cent jump in net profit last year on strong property and entertainment businesses, despite global economic uncertainties.

Net profit in the January-December period rose to Dh2.7 billion ($740 million) while revenue grew 1 per cent annually to Dh34.5 billion, the company said in a statement on Thursday.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) for the 12 months to the end of December climbed 12 per cent to Dh4.6 billion.

The privately held conglomerate said it “sustained growth across key performance metrics, underscoring its ability to generate healthy cash flows”.

The group’s total assets increased 5.4 per cent on a yearly basis to Dh69.7 billion in 2023.

Ahmed Ismail, chief executive of Majid Al Futtaim, acknowledged the impact of regional macroeconomic challenges such as currency devaluation in Egypt, Lebanon, Pakistan and Kenya, as well as the geopolitical events shaping market dynamics and consumer behaviours.

However, the company is "confident in our ability to navigate the path ahead while delivering value to our stakeholders in 2024 and beyond”, he added.

Founded in 1992, Majid Al Futtaim’s business interests range from retail and leisure to property development. It employs 43,000 people and welcomes 600 million customers to its shopping malls, communities, retail and entertainment destinations each year.

The company said revenue for the property business rose 20 per cent annually to Dh6.9 billion last year, while Ebitda climbed 21 per cent to Dh3.6 billion. It was driven by increased footfall in UAE shopping malls and strong sales at its Tilal Al Ghaf residential property development.

The country's property market rebounded strongly from the coronavirus-induced slowdown on the back of government initiatives and broader growth in Emirates’ economy.

The UAE's economy is expected to grow by 5 per cent this year, driven by a robust expansion in the country's non-oil sector and an increase in foreign direct investment, Abdulla bin Touq, Minister of Economy, said last month.

Meanwhile, Majid Al Futtaim's shopping malls business witnessed tenant sales of Dh30 billion, an increase in overall occupancy to 96 per cent and an 8 per cent rise in footfall, welcoming 232 million visitors last year.

Its hotels witnessed an 82 per cent room occupancy rate. Their revenue increased 4 per cent to Dh700 million.

The retail business, however, reported a 4 per cent drop in revenue to Dh24.7 billion, with Ebitda dipping 15 per cent, “impacted primarily by currency devaluations” and a “shift in consumer sentiment related to geopolitical tensions in the region”, the company said.

Majid Al Futtaim, which opened 20 stores in the region last year, said its digital retail business reported a 17 per cent increase in revenue to Dh2.6 billion.

In September, Majid Al Futtaim launched an initiative to boost local start-ups by connecting them with global market opportunities. It rolled out the Launchpad X concept store – a collaborative commercial shop for entrepreneurs.

Revenue for the company's entertainment business rose 7 per cent annually to Dh1.8 billion as the cinema business continues to recover from “delays and adjustments to its content pipeline”.

The company has expanded its regional footprint with the opening of Snow Abu Dhabi in June 2023, the emirate’s first indoor snow park, and the group’s fourth snow destination in the region.

Its lifestyle businesses recorded a 29 per cent rise in revenue to more than Dh1 billion.