MAF’s H1 2019 financial results show resilient performance

Business Bureau, Gulf Today

Majid Al Futtaim (MAF), the leading shopping mall, communities, retail and leisure pioneer across the Middle East, Africa and Asia, has announced its audit-reviewed operational and financial results for the first six months of the year.

During this period, overall group revenue increased by 1 per cent to Dhs17.9 billion, despite challenging market conditions and more cost-conscious consumer behaviour across the region. EBITDA increased by 1 per cent, standing at Dhs2.1 billion, while the group’s increased focus on working capital management and operational excellence resulted in operating cashflow amounting to 115 per cent of EBITDA. The group’s assets increased 7 per cent to approximately Dhs64 billion, on account of the introduction of IFRS16. Net borrowings stand at around Dhs12.8 billion.

MAF’s financial results during H1 2019 were enabled by maintaining strong financial discipline across its portfolio. In its efforts to meet the evolving needs and demands of customers, while mitigating risk and ensuring sustainable growth, the company continues to diversify its business model and prioritise initiatives that support its long term strategic direction. During 2019, Majid Al Futtaim further expanded its offering across geographies, while enhancing its digital capabilities and investing in human capital.

Alain Bejjani, Chief Executive Officer of Majid Al Futtaim - Holding, commented on the company’s financial results: “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. 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.

“While we continue to make essential investments in talent and technology, I am also encouraged by the progress we are making towards our sustainability agenda, which is allowing us to have a positive influence on the economies, communities and societies where we do business.”

During H1 2019, Majid Al Futtaim continued the expansion of its core businesses across the region with the addition of 19 new Carrefour stores, two new shopping malls, and 65 new VOX cinema screens.

The company’s digital transformation saw greater online penetration through its Carrefour and VOX Cinemas brands during the first half of the year. 59 per cent of all ticket sales at VOX Cinemas were completed online, compared to 46 per cent during the same period last year, while all tickets in Saudi Arabia were sold online in 2019. During the first six months, Carrefour more than doubled the total number of online transactions completed during full year 2018.

The group continued to invest in its people agenda with more than 115,000 hours of training delivered to its employees at the Majid Al Futtaim Leadership Institute. The Majid Al Futtaim Retail Business School was also established in Dubai to provide functional, commercial and on-the-job training for employees, focusing on fresh food, non-food, services and merchandising.

Majid Al Futtaim’s sustainability agenda was further bolstered by a “low risk” environmental, social and governance (ESG) rating from Sustainalytics, and an ‘A’ rating from Morgan Stanley Capital International (MSCI). These positive ratings helped in creating widespread interest from investors when Majid Al Futtaim issued the world’s first benchmark corporate Green Sukuk. In line with the newly established Green Finance Framework, the issuance will support the company’s commitment to develop sustainable assets and practices.

Majid Al Futtaim – Properties registered a decline of 3 per cent in revenue and 1 per cent in EBITDA in the first six months of 2019, standing at Dhs2.1 billion and Dhs1.5 billion respectively.

The company’s shopping malls welcomed more than 100 million visitors in the first half of the year, while the total occupancy of shopping malls remained strong at 93 per cent. The shopping mall portfolio grew to 25 destinations, with the opening of City Centre Suhar in Oman, and My City Centre Masdar in Abu Dhabi, which is the company’s first shopping mall in Abu Dhabi and the capital’s most sustainable mall.

Majid Al Futtaim hotels reported an increase of 2 per cent in their average occupancy rate, growing to 78 per cent, although a decline in revenue per available room (RevPAR) was reported in line with wider market trends.

Despite a reduction in discretionary spend and basket size, Majid Al Futtaim – Retail recorded flat revenue growth, standing at Dhs14.6 billion in the first six months of the year. While revenue was driven by new store openings in Egypt, in particular, EBITDA decreased by 1 per cent to Dhs603 million compared to the same period in 2018.

The Carrefour brand strengthened its footprint with the opening of 7 hypermarkets and 12 supermarkets across the region. In addition to new store openings, Carrefour also launched ‘Carrefour Business’, the company’s business-to-business offering to hotels, restaurants and the catering industry.