Dubai's Majid Al Futtaim net profit soars to Dh2.7b as retail, property operations cash in

Dubai: The Dubai-based builder of mega-malls and communities, Majid Al Futtaim saw its 2023 net profit get a 12 per cent boost to Dh2.7 billion, helped by further strides made at its luxury all-villa development Tilal Al Ghaf.

Overall Group-wide revenues for the year came to Dh34.5 billion, a 1 per cent uptick. But the EBITDA gain was impressive, up 12 per cent, to Dh4.6 billion. 

But it was properties that the company scored some big wins. In a surging property market as Dubai's, particularly in luxury real estate, Majid Al Futtaim Properties had a 20 per cent year-on-year increase in revenue to Dh6.9 billion and 21 per cent on EBITDA to Dh3.6 billion due to the 'success of UAE-based shopping malls and Tilal Al Ghaf'. (The community, which is still in development, had a gross sales value of Dh4.7 billion in 2023.)

The Group 'sustained' growth across key performance factors, consolidating its credentials to 'generate healthy cash flows' and a 'healthy balance-sheet'. Total assets increased to Dh69.7 billion, up from Dh66.1 billion in 2022.

"The company demonstrated a resilient financial performance, reflecting its strategic approach to its diverse portfolio of businesses and the strength of its core operations," said a statement.

The group-wide net debt increased to Dh15 billion, primarily due to investments in working capital.

New accounting way

Last year, the group reassessed  its accounting policy with respect to supplier benefits for its retail operations. Accordingly, this income is now recognised as credit against cost of sales instead of classified as revenue. (This restatement has no impact on group’s net profit or EBITDA.)

Ahmed Galal Ismail, CEO of Majid Al Futtaim, said that the '2023 financial performance reflects our sustained focus to deliver value-accretive, profitable growth'.

"The strong results from our properties business, robust growth from our entertainment and lifestyle businesses, and promising delivery from our Majid Al Futtaim Retail digital transformation - which has delivered double digit increase in sales revenue - underpin the strength inherent to our diversified portfolio and the 43,000 employees that work tirelessly to bring our late founder’s vision to life."

'Not immune'

“While we are not immune to the impact of the regional macroeconomic challenges - including currency devaluation in Egypt, Lebanon, Pakistan and Kenya, and the deeply concerning geopolitical events that are shaping market dynamics and consumer behaviours - we are confident in our ability to navigate the path ahead while delivering value to our stakeholders in 2024 and beyond.”

The retail division's revenue declined 4 per cent on a restated basis to Dh24.7 billion, which was set off by 'primarily' by currency devaluations in Egypt, Pakistan, Kenya, and Lebanon, and a 'shift in consumer sentiment related to geopolitical tensions in the region'.

Its EBITDA declined 15 per cent to Dh1.1 billion year on year. (At a constant currency rate, revenue grew by 4 per cent and EBITDA dipped 4 per cent.)

Solid occupancy

Majid Al Futtaim Hotels had an 82 per cent occupancy rate through 2023. Hotel' revenues increased 4 per cent to Dh700 million, with RevPAR growing 5 per cent compared to 2022.