Due to the strong economic momentum in its home market of the UAE, Majid Al Futtaim Holding, one of Dubai’s major private sector businesses and the largest mall operator in the Middle East, recorded a substantial increase in profit and revenue.
According to Ahmed Ismail, chief executive of Majid Al Futtaim, net profit for the six months ending in June increased by an annual 74% to Dh1.7 billion ($463 million), while revenue for the reporting time increased by 5% to Dh18.9 billion.
For the first half of this year, earnings before interest, taxes, depreciation, and amortization increased 13% to Dh2.1 billion.
Although currency devaluations in several of the areas where we operate, the year is off to a solid start as revenue is up 5%.
More encouraging is the fact that, thanks to “a booming economy in our home market of the UAE,” our profitability is increasing at a faster rate than our revenue.The second-largest economy in the Arab world, the UAE, made a remarkable recovery from Covid-19’s slump last year, and growth momentum is expected to continue through 2023. After expanding by 7.9% in 2022, it increased by 3.8% annually in the first quarter of this year, helped by strong growth in the non-oil sector as it works to diversify.
According to data from the Federal Centre for Competitiveness and Statistics, which Abdulla bin Touq, the Minister of Economy, cited earlier this month, the gross domestic product increased to Dh418.3 billion in the three months ending in March, with significant contributions from the majority of the sectors and economic activities that are “the key pillars of the national economy.”
GDP excluding oil increased by 4.5% annually to Dh312 billion.
The privately held corporation owns and manages 29 shopping centers, 18 hotels, and mixed-use neighborhoods. Its commercial interests range from the retail and leisure sectors to real estate development.
During the reporting period, “multiple factors” including the reallocation of capital to the business’s more lucrative and higher margin areas were the primary drivers of profitability.
With a 40% increase in sales and a 22% increase in ebitda, “our residential [properties] company has recorded record results. In fact, our whole properties business has generated another set of records. Naturally, operational effectiveness and financial restraint play a role.
According to him, Dubai residential costs were nominally lower than their last peak, and the company plans to start construction on a new project before the end of the year.
One of the key engines of the UAE’s non-oil economy, the real estate sector, has also maintained growing pace into 2023 following significant increases in the previous two years.
The expansion of the 10-year golden visa program, residency permits for remote employees and retirees, as well as economic benefits from Expo 2020 Dubai have all contributed to the sector’s growth.
Despite global socioeconomic challenges, the property market demonstrated good performance in every sector in the first half of the year, according to a report published in July by Consultancy CBRE.
According to CBRE, while average prices in Dubai’s market increased by 16.9% in the year to June 2023, the market in Abu Dhabi saw 4,737 transactions for sale in the first half of the year, an increase of 88.6% yearly.
Majid Al Futtaim reported that the Tilal Al Ghaf residential property development and UAE-based shopping malls were the main drivers of the company’s property business’s revenue growth of 39% to Dh3.4 billion and ebitda increase of 22% to Dh1.7 billion.
According to the company’s financial statement, which was published on Nasdaq Dubai, the property business was the main driver of revenue and profit growth throughout the reporting period.
Foot traffic in shopping centers grew by 12%, with the Mall of the Emirates having its best first-half foot traffic ever. Tenant sales increased by 7%, with the company’s malls in the UAE contributing the most to revenue.
However, the retail sector saw a 2% decline in revenue to Dh14.1 billion and a 7% decline in ebitda in the first half of the year, according to a statement released by the company on Monday. “Currency devaluations across the group’s footprint” were mostly to blame, it was noted.
Revenue increased by 8%, and ebitda rose by 5%, at a steady exchange rate.
The company said its digital retail business continued strong, with a 13% increase in revenue to Dh1.2 billion. The company launched five additional outlets in the region during the first half.
Majid Al Futtaim’s entertainment division saw a 4% annual increase in revenue to Dh822 million as the movie industry continues to bounce back from “delays and adjustments to its content pipeline”.
With the inauguration of Snow Abu Dhabi in June—the group’s fourth snow destination in the region—the company increased the scope of its entertainment business in the first half.
In the first half of the year, it opened 11 new outlets, which resulted in a 31% increase in revenue for its lifestyle businesses to Dh473 million.
At the conclusion of the first half, Majid Al Futtaim had net borrowings of Dh15 billion, with the majority of the debt expiring in 2026 and later, in order to maintain “a strong financial and liquidity position supported by a well-balanced financing structure.”
As it seeks to diversify its funding sources, the corporation secured $500 million in May through a green sukuk, its fourth in about four years. The corporation stated at the time that it would refinance a previous $800 million bond commitment with the proceeds.