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Majid Al Futtaim’s profit surges 74% as GCC flourishes

Majid Al Futtaim's revenues rose 5% year on year to AED18.9 billion Majid Al Futtaim Holding
Majid Al Futtaim's revenues rose 5% year on year to AED18.9 billion

UAE retail conglomerate Majid Al Futtaim Holding reported a 74 percent year-on-year rise in net profit to AED1.7 billion ($462.84 million) in the first half of 2023, driven by positive macroeconomic conditions across the Gulf countries.

Revenues rose five percent year on year to AED18.9 billion, fueled by a 37 percent increase in income from the property segment, the company said in its interim financial statement for the first half.

The lifestyle and entertainment businesses reported solid growth, rising 31 percent and four percent, respectively.

However, retail revenue declined by two percent annually due to currency devaluations in Egypt, Pakistan, Kenya and Lebanon.

Operating profit increased to AED809 million from AED683 million reported in the prior period, primarily driven by higher revenue and higher margins.

Ebitda increased by 13 percent year on year to AED2.1 billion, with Ebitda margin rising by 90 basis points.

Majid Al Futtaim Properties revenue grew by 37 percent to AED3.6 billion in the first six months of 2023 from AED 2.64 billion a year earlier.

The increase was driven by Tilal Al Ghaf development and UAE-based shopping malls, which benefited from increases in rental income due to strong tenant sales.

The key business performance metrics of the shopping mall’s business remained positive, with footfall and tenant sales (excluding Carrefour) rising 12 percent and 10 percent year on year, respectively. Occupancy stood at 95.3 percent, 4.7 percentage points higher than last year.

Shopping mall valuations continued in a positive trajectory, reaching AED1.8 billion, as the flagship Mall of the Emirates recorded its highest valuation since its inception.

Retail revenue from physical stores fell three percent annually, but online revenue rose 13 percent to AED1.2 billion in the six months to June 30, 2023, from AED 1.1 billion for the same period last year.

The company’s net debt increased by AED823 million to AED15 billion in the first half of 2023 from AED14.2 billion on December 31, 2022. Net finance cost increased due to a rise in interest rates and an increase in overall net debt. The increase in net debt was due to cash being utilised to fund working capital requirements.

Majid Al Futtaim did not declare any interim dividend for the period compared to AED400 million in 2022.