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Diversified portfolio helps Majid Al Futtaim to post Dh1.6b H1 profit

Group’s assets grew by 2% year-on-year

Published: Tue 27 Aug 2024, 4:49 PM

By
Issac John

Majid Al Futtaim, a leading Dubai-based conglomerate, reported on Tuesday a net profit of Dh1.6 billion and revenue of Dh16.7 billion for the first half (H1) of 2024.

In a statement, the shopping malls, communities, retail, and leisure pioneer group, said it could deliver a stable performance, supported by its diversified portfolio and strong balance sheet despite macroeconomic headwinds from geopolitical instability and currency devaluations in the region.

While the group’s assets grew by two per cent year-on-year, the retail arm’s revenue declined by six per cent to Dh16.7 billion, and Ebitda (earnings before interest, taxes, depreciation and amortisation) fell by two per cent to Dh2.1 billion. However, at constant currency rates, the group’s revenue decreased by only three per cent, with Ebitda and net profit posting a modest 1.0 per cent increase, said the statement.

“Our first half-year results continue to underscore the strength of our diversified portfolio, protecting overall profitability despite the challenges within some of our current operating environments,” said Ahmed Galal Ismail, CEO, Majid Al Futtaim – Holding. “Majid Al Futtaim Properties delivered a record performance, driven by the success of UAE-based shopping malls and strong consumer confidence in Majid Al Futtaim’s Tilal Al Ghaf and newly launched Ghaf Woods residential developments. Our lifestyle company continued to see positive demand across its portfolio, while the Entertainment company showed encouraging progress in its cinema admissions, reflecting the steady return of quality content. The ongoing transformation of our retail digital business has enabled solid progress in advancing our omnichannel aspirations. The appointment of new leadership in the second quarter will further strengthen retail’s performance through a turnaround plan focusing on market leadership through unrelenting customer-centricity.”.

The group’s diversified portfolio, particularly its property and retail digital businesses, helped mitigate the impact of broader economic challenges. The group’s property division saw a nine per cent increase in revenue to Dh3.7 billion, primarily driven by Tilal al Ghaf residential real estate development as well as an increase in revenues from the group’s UAE shopping malls. Ebitda rose by 11 per cent to Dh1.9 billion, driven by the success of UAE-based shopping malls and strong sales from its residential projects.

Shopping malls registered a year-on-year revenue growth of eight per cent and recorded 96 per cent occupancy. Hotels reported an increase in revenue per available room (RevPAR) of 18 per cent year-on-year mirroring Dubai’s increasing appeal as a tourism hub as the city welcomed over nine million overnight visitors in the first half of 2024, while average occupancy was down by two per cent. In March 2024, the group sold a number of non-core assets from its hospitality portfolio.

The group said it continued to drive sales across its residential community portfolio, booking Dh5.9 billion in gross sales in the first half of the year. In June, Majid Al Futtaim launched a new residential development in Dubai, Ghaf Woods, a first-of-its-kind integrated forest-living community, which saw its first phase of 1,000 units in Dubai sell out, demonstrating strong market interest and demand.

The cinemas portfolio registered three per cent year-on-year increase in admissions contributing towards a strong Ebitda growth of 103 per cent for the period. The lifestyle business reported an increase in revenue by 23 per cent to Dh584 million. Retail registered an 11 per cent year-on-year decline in revenue to Dh11.6 billion and a 47 per cent year-on-year decline in Ebitda to Dh278 million. “This is attributable to declining basket size resulting from dampened consumer sentiment following geopolitical conflict in the region and the impact of currency devaluation in Egypt and Kenya. With constant FX rates, revenue would have declined by 8.0 per cent,” the group said in a statement.

“Majid Al Futtaim continues to maintain a strong financial and liquidity position backed by a well-balanced capital structure encompassing capital markets and bank financing. Net borrowings decreased to Dh14.6 billion, with most of its debt maturing 2027 onwards,” said the statement.