Dubai: The shopping malls-to-communities developer Majid Al Futtaim’s net profit for the first six months of 2023 hit the sweet spot with Dh1.69 billion against Dh970 million a year ago – up 74 per cent. Just as important is the firming up on key operating margins.
“The Group has taken significant steps to renew its focus on operational excellence, in particular driving efficiencies and productivity to deliver both sustainable, profitable organisational growth and value to its stakeholders,” the company said in a statement. “These efforts are reflected in the Group’s robust H1-23 financial performance.”
On the revenue side, the Group's numbers came to Dh18.86 billion, a solid improvement on the Dh18 billion from H1-22. The company had been turning in strong results from its Dubai development, Tilal Al Ghaf, where its 'island' project consistently featured among the priciest homes sold in the city during the period.
Incidentally, as of January 1, 2023, the Group’s online grocery operations and other businesses - initially coming under the parent company - transferred to Majid Al Futtaim Holding.
The overall growth trajectory mirror what some of UAE's bigger listed property and retail focussed companies achieved during the period.
Bulked up profit margins
Through the first-half of 2023, UAE consumers ramped up on their spending, whether at malls, shops or online. There was none of the caution that many retail analysts had forecast at the start of the year.
A sizeable portion of that elevated spending was reflected in Majid Al Futtaim's higher margin (11.4 per cent vs 9.2 per cent), reflects improved EBITDA margins. This came about as the impact of 'rising costs and supply chain challenges in prior years flattened out'.
Property has been helping too
The Dubai property boom rubbed off on the Group's valuation gains from land and its buildings, amounting to Dh1.8 billion (against Dh800 million a year ago). Of this, Dh1.5 billion is recognised in the latest profit and loss statement. A gain of Dh300 million is recorded under revaluation reserve in other comprehensive income. "Gains were mainly due to strong performance across UAE assets," the company said.
Keep spending on a high
Overall capital spending at the end of June came to Dh700 million, down from Dh1 billion. Capital expenditure from properties was Dh400 million and was 'mainly focused on shopping malls operational and routine capex'.
Net debt on its books was higher by Dh823 million to Dh15 billion, with the 'increase primarily due to cash utilised in working capital during the period'.