One of the major private sector companies in Dubai and the largest mall operator in the Middle East, Majid Al Futtaim Holding, announced an 18% increase in first-half earnings as revenue was lifted by a boosted resurgence in the retail and leisure sectors amid a solid economic recovery.
Earnings before interest, taxes, depreciation, and amortisation (Ebitda) for the six months to the end of June climbed to Dh1.9 billion ($517.71 million), the privately-held conglomerate said in a statement on Wednesday.
Revenue for the first six months of the year climbed 15 per cent year-on-year to Dh18bn, underpinned by strong operational performance, diversification efforts and cost efficiencies.
“A strong, customer-focused strategy supported by unrivalled data and analytics capabilities has enabled Majid Al Futtaim to deliver sustained growth through first half of 2022,” Alain Bejjani, chief executive at Majid Al Futtaim, said.
“Our efforts have been further amplified by Mena’s steady progress in moving beyond post-pandemic recovery as we collectively turn our efforts towards economic expansion and regional prosperity.”
The retail industry that took a severe hit during the pandemic-driven slowdown bounced back strongly last year and maintained the growth momentum into this year. The rebound was underpinned by steady economic recovery across the markets where the company operates, especially in the UAE.
The UAE economy is set to post its strongest annual expansion since 2011 after it grew by 8.2 per cent in the first three months of this year on higher oil prices and measures to mitigate the impact of the Covid-19 pandemic, according to data from the Central Bank of the UAE.
UAE consumer spending increased 22 per cent in the first half of this year, despite rising fuel costs and higher inflation.
Spending on retail items grew an annual 16 per cent, while spending on non-retail goods rose 31 per cent, Majid Al Futtaim said in its State of the UAE Retail Economy report earlier this month.
The boost in consumer confidence benefited the company, with “increased shopping mall footfall, hotel occupancy rates, and admission to its cinemas and leisure and entertainment venues”, the company said.
With retailing trends such as the consumer demand for digital and omnichannel experiences gathering pace, the company is well-placed to capitalise on digital opportunities, Majid Al Futtaim said.
However, the company continues to take the “necessary steps” to mitigate any immediate inflationary impact stemming from supply chain strain and will continue to focus on its long-term strategy of sustainable value creation.
“While our region is not immune to building global inflation and supply chain pressures, Majid Al Futtaim remains optimistic towards the broader economic outlook,” Mr Bejjani said.
“Our prudent financial discipline and strong governance ensure our resilience in the face of any immediate impact.”
The company, which benefited from an Expo 2020-driven tourism influx earlier in the year, reported strong earnings and revenue growth across its business verticals.
Revenue at the company’s properties business jumped 51 per cent to Dh2.4bn, while Ebitda increased 27 per cent to Dh1.4bn.
Shopping mall tenant sales rose 21 per cent during the first six months, while footfall increased 20 per cent to 100 million visitors.
The company’s hotel portfolio’s revenue grew to Dh333m from a lower base of 2021 due to capacity restrictions. Revenue Per Available Room, a measure of performance in the hotel industry, and average occupancy rates climbed 142 per cent and 43 per cent, respectively, the company said.
Majid Al Futtaim’s retail business recorded a 9 per cent increase in revenue to Dh14.4bn, however, Ebitda fell 9 per cent Dh567m. The company also continued to expand its international footprint and opened 18 new stores across the countries in which it operates.
The company’s leisure, entertainment and cinemas arm registered a 56 per cent increase in revenue to Dh784m, boosted largely by the removal of operating capacity restrictions. Its cinema admissions increased by 60 per cent to 8.8 million.
Majid Al Futtaim’s lifestyle arm reported a 42 per cent annual rise in revenue to Dh360m.
The company said it remains “committed” to the markets it operates in and will continue to invest across business lines during the second half of 2022.
It plans to invest in corporate initiatives including digital transformation, data and analytics, customer experience and loyalty programmes.
Majid Al Futtaim said its robust balance sheet has allowed it to maintain a “strong financial and liquidity position.
According to the corporation, its debt maturity profile is still low and the next significant loan maturity isn’t until September 2024.