Majid Al Futtaim, the leading shopping mall, retail and leisure pioneer across the Middle East and North Africa, today reported its preliminary and unaudited operational and financial results for the first half of 2015, with revenue showing sustainable growth, up seven per cent compared to the first half of last year. EBITDA remains stable at AED 1.8 billion, reflecting higher promotional activities, costs associated with new market entries, product mix impact and a softer market in the hospitality industry.
“This is a transformational year, two decades since the launch of City Centre Deira, and we are positioning the business for accelerated development and sustainable growth. During the first half of 2015 the company announced its future strategy to drive its ambitious expansion and growth plans. On the back of a strong 2014 we are progressing well,” said Alain Bejjani, Chief Executive Officer of Majid Al Futtaim Holding.
Under Bejjani’s leadership since February, Majid Al Futtaim Holding has redefined its role as the strategic architect of the group, spearheading corporate strategy, the people agenda, performance management, corporate branding and innovation, providing overall management of the synergistic businesses, and embedding a high performance culture.
“Building on our core competencies, we are also focused on ensuring robust internal systems are in place to enable us to cement and advance our leadership position in all of our markets, and export our operational excellence to new geographies,” he added. “We are making investments in our human capital development with our new proprietary internal educational enterprise – The Majid Al Futtaim Leadership Institute, as well as continuing to lead the region on corporate governance and sustainability.”
Operating Company Performance
Properties: MENA’s leading diversified real estate and property services company, reported revenue of AED 2 billion with EBITDA at AED 1.2 billion, stable versus the previous year. The occupancy across the shopping malls portfolio remained strong at 97%. The company’s malls welcomed 85 million visitors through the period, with a 2% growth in footfall versus 2014 first half levels, impacted mainly by the redevelopment currently underway to expand the company’s flagship property - Mall of the Emirates. Year-to-date occupancy rates were 77% for comparable hotels, but the revenue per available room decreased by 11% from prior levels reflecting softening market conditions during the first half of the year.
Retail: Carrefour saw sales up around 7% year-on-year, to AED 11.2 billion in H1 2015. The business’s EBITDA rose by over 3% to AED 563 million, impacted by one-time costs associated with new market entries and additional store openings in existing markets. In the first half of 2015, Majid Al Futtaim Retail opened 15 new Carrefour stores, expanding its portfolio to 143 outlets in 13 countries across the Middle East, Central Asia and North Africa.
Ventures: In the first half of 2015, the diverse group of businesses achieved strong operational growth with revenue increasing by 21% to AED 609 million. The companies complement the core business, with a leading presence in cinemas, leisure and entertainment, as well as financial services, fashion and healthcare. EBITDA for the year-to-date was at AED 56 million.
“Several large scale projects are currently under construction in both existing and new markets. Significant opportunities lie ahead as our brands continue to provide innovative experiences to customers. Dubai remains the core of our business and we are expanding our presence in Egypt, Saudi Arabia and Oman, in addition to looking to establish a foothold in Africa and Eurasia,” added Bejjani.
Majid Al Futtaim’s ongoing investments in Dubai continue with the investment of AED 267 million for phase one of the new City Centre Me’aisem. This will be the company’s sixth City Centre in the UAE, located in the International Media Production Zone (IMPZ) and is expected to open in September 2015. The seventh - City Centre Shindagha - is also planned to open by the end of the year. Plans have also been announced for a second My City Centre, a 5,000 m2 mall that will serve communities in Al Barsha that is scheduled for completion in Q3 2016.
The second phase of the much-anticipated 25,000 m2 expansion at Mall of the Emirates is on track for completion in Q4 2015 and will include a new major VOX Cinema experience, fresh retail anchor stores as well as boutiques and a variety of dining choices.
Majid Al Futtaim also launched Al Zahia, Sharjah’s first-ever gated mixed-use community for Sharjah Holding, a strategic partnership between Majid Al Futtaim and the Government of Sharjah.
The company continues to invest in building its leadership in markets across the MENA region. In March the company announced an increase in total investments in Egypt from EGP18 billion to EGP22.5 billion (AED 8.4 billion to AED 10.5 billion) as part of its existing five-year plan. The plan includes multiple investments throughout the country across all of its businesses, including the Ski Egypt development at the Mall of Egypt - a first for the continent of Africa - as well as the introduction of VOX Cinemas to the Egyptian market. In addition, there has been further progress on lucrative land banking opportunities in Saudi Arabia.
Following the successful completion of phase one, Majid Al Futtaim also commenced phase two of its OMR 27 million (AED 254 million) redevelopment of City Centre Muscat.
The company’s varied portfolio of leading international retail brands continues to grow with the announcement of plans to bring lululemon athletica and Peacocks to consumers across the MENA region. Additional global brand names will be announced later this year. Majid Al Futtaim Retail continues to expand its presence across the region with plans to open an additional 18 Carrefour stores before year end.
The company continues to maintain a balanced debt profile and sufficient liquidity covering approximately two years of gross financing needs through its cash and available committed lines.
Both Fitch Ratings and Standard & Poor’s have reaffirmed the company’s credit rating at BBB with a stable outlook during the year, reiterating its credit strengths such as quality of assets, strong corporate governance and prudent financial management.
• Overall group revenue up 7% year-on-year to AED 13.7 billion for H1 2015, with EBITDA at AED 1.8 billion
• BBB credit rating reaffirmed by Fitch Ratings and Standard & Poor’s
• Commenced phase two of OMR 27 million (AED 254 million) redevelopment of City Centre Muscat
• Launched first residential community project in UAE with Sharjah Government
• VOX Cinemas launched 14 new screens in the region
• Added 15 new Carrefour stores taking the total to 143 outlets
• Mall of Emirates 25,000 m2 expansion on track for completion in Q4 2015
• Expanding the City Centre network to seven malls in the UAE with the opening of two destinations by the end of 2015 – City Centre Me’aisem and City Centre Shindagha
About Majid Al Futtaim
Founded in 1992, Majid Al Futtaim is the leading shopping mall, retail and leisure pioneer across the Middle East and North Africa (MENA).
A remarkable business success story, Majid Al Futtaim started from one man’s vision to transform the face of shopping, entertainment and leisure to ‘create great moments for everyone, every day’. It has since grown into one of the United Arab Emirates’ most respected and successful businesses spanning 13 international markets, employing over 28,000 people, and achieving the highest credit rating (BBB) among privately-held corporates in the Middle East.
Majid Al Futtaim owns and operates 17 shopping malls, 11 hotels and three mixed-use communities in MENA, with further developments underway in the region. The shopping malls portfolio includes Mall of the Emirates, City Centre malls, and also four community malls which are in joint venture with the Government of Sharjah. The Company holds exclusive rights to the Carrefour franchise in 38 markets across Middle East, Africa and Central Asia, operating a portfolio of over 60 hypermarkets and over 70 supermarkets in 13 countries.
Majid Al Futtaim operates 143 VOX Cinema screens and 18 Magic Planet family entertainment centres across the region, in addition to iconic leisure and entertainment facilities such as Ski Dubai and iFly Dubai, among others. The Company launched the first LEGO-certified store in the Middle East and is parent to the consumer finance company issuing 'Najm' credit cards, a fashion retail business representing international brands such as Abercrombie & Fitch, Juicy Couture and Halston Heritage, and a healthcare business. In addition, Majid Al Futtaim launched Enova, a facility management company, through a joint venture operation with Veolia, a global leader in optimised environment resource management. The Company also operates in the food and beverage industry through a partnership with Gourmet Gulf.