Majid Al Futtaim reports half-year loss as value of properties falls

Company manages to continue top-line growth 'despite challenging market conditions'

Majid Al Futtaim Group's new City Centre Suhur Mall in Oman. Courtesy of Majid Al Futtaim

Majid al Futtaim Group swung to a net loss during the first half of 2019 as it suffered a Dh860 million writedown on the value of its land and property portfolio.

The company reported a loss to its owners of Dh448m for the year to June 30, compared to a profit of Dh446m in the same period last year. It managed to grow revenue by 1 per cent to Dh17.9 billion, though, and said earnings before interest, tax, depreciation and amortisation were 1.2 per cent higher at Dh1.2bn.

“The strength and durability of our business has been a key factor in our financial performance for the first half of 2019, demonstrating the importance of geographic and business model diversification," said Alain Bejjani, chief executive of Majid Al Futtaim Holding.

"Our focus on delivering a unique and innovative customer experience has enabled us to extend our customer base, while we have successfully optimised costs and created greater operating efficiencies."

Majid Al Futtaim's holding company oversees a number of different businesses - the largest of which is a retail arm that owns the Carrefour franchise in 38 countries across the Middle East, Africa and Asia. It increased revenue by 1 per cent to Dh14.6bn, "despite challenging market conditions and more cost-conscious consumer behaviour across the region", the company said in a statement.

Its properties arm, however, which owns and operates shopping centres, reported a 3 per cent fall in revenue and a 1 per cent decline in Ebitda. It said occupancy at the malls remained strong at 93 per cent, and that the number of malls in its portfolio grew to 25 following the opening of the new City Centre Suhar mall in Oman, and the My City Centre Masdar mall in Abu Dhabi. The company also expects to open a new mall, City Centre Almaza in East Cairo, Egypt by the end of the year.

The company's third major business line, Majid Al Futtaim Ventures, reported a 16 per cent increase in both revenue and Ebitda, to Dh1.3bn and Dh137m respectively, during the period. It owns the Vox Cinema chain, and has capitalised on the recent lifting of restrictions on cinemas in Saudi Arabia with the launch of 49 new screens in the kingdom, bringing the total to 53. It plans to open 600 screens in Saudi Arabia by 2023.

In its second quarter report on the UAE real estate market, consultancy JLL pointed to tough trading conditions in both Dubai and Abu Dhabi, with supply set to increase further over the next 18 months.

"The Dubai retail market is currently facing a challenging time as many retailers are limiting their expansion plans, while others are seeking to close branches," the report said. "Retailers are increasingly turning to discounts/promotions to entice consumers to spend."

However, overall retail sales are predicted to grow at a compound rate of 5.2 per cent over the next five years, according to Euromonitor.

It is forecasting overall retail sales of $57.07bn in the UAE this year, up from $54.5bn last year.