Majid Al Futtaim announces H1 2019 results

Majid Al Futtaim – one of the leading shopping mall, communities, retail and leisure pioneers 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% to AED17.9 billion, despite challenging market conditions and more cost-conscious consumer behaviour across the region.

The group’s EBITDA increased by 1%, standing at AED2.1 billion, while the group’s increased focus on working capital management and operational excellence resulted in operating cashflow amounting to 115% of EBITDA. The group’s assets increased 7% to approximately AED64 billion.

Majid Al Futtaim’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.

Commenting on the results, Alain Bejjani, CEO of Majid Al Futtaim – Holding, said, “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 Cinemas screens.

The company’s digital transformation saw greater online penetration through its Carrefour and VOX Cinemas brands during the first half of the year. Fifty-nine percent of all ticket sales at VOX Cinemas were completed online, compared to 46% 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.

Operating Company Performance

Majid Al Futtaim – Properties: Majid Al Futtaim – Properties registered a decline of 3% in revenue and 1% in EBITDA in the first six months of 2019, standing at AED2.1 billion and AED1.5 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%. 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.

Majid Al Futtaim – Retail: Despite a reduction in discretionary spend and basket size, Majid Al Futtaim – Retail recorded flat revenue growth, standing at AED14.6 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% to AED603 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.

Majid Al Futtaim Ventures: Majid Al Futtaim – Ventures, recorded an increase of 16% in both revenue and EBITDA in the first six months of the year, with revenue standing at AED1.3 billion and EBITDA at AED137 million. VOX Cinemas strengthened its market share in Saudi Arabia, driving forward its pioneering expansion in the Kingdom with the launch of 49 new screens. Of the 600 screens committed to Saudi Arabia by 2023, Majid Al Futtaim has already opened 53. In total, VOX Cinemas opened 65 new screens across the region during the first half of the year. The company also entered into an alliance with Image Nation Abu Dhabi and MBC Studios to launch a production partnership for film and TV projects.

Future Investment

During the second half of 2019, Majid Al Futtaim is set to continue the expansion of its core businesses, while delivering new experiences for customers across the region.

City Centre Almaza will soon open in East Cairo and is set to become one of the favoured destinations for shopping and entertainment, redefining the shopping landscape with a unique environment for visitors.

Majid Al Futtaim – Retail will open its first Carrefour store in Uganda in H2 2019, providing Ugandan customers with access to international standard retail experiences. Majid Al Futtaim – Retail will continue to open new stores in existing markets, including the addition of 12 new Carrefour stores in Egypt by the end of 2019.

The company will also launch a lifestyle rewards programme to provide customers with the opportunity to earn and burn points across the company’s portfolio of brands and assets.