(MENAFN- Khaleej Times) Majid Al Futtaim on Monday said the group's operational and financial performance remained resilient despite increasing challenges in the form of inflation, supply chain pressures and energy shortages slowing global economic growth in 2022. The leading shopping malls, communities, retail and leisure pioneer across the Middle East, Africa, and Central Asia, posted 12 per cent year-on-year growth in consolidated revenues to Dh 36.3 billion as the visitor numbers to shopping malls increased by 16 per cent while tenant sales rose by 11 per cent last year. However, the net profit dropped two per cent to Dh2.4 billion and the group continues to maintain a strong balance sheet, with assets valued at approximately Dh66 billion, up nine per cent and net borrowings of Dh14.2 billion.
Majid Al Futtaim's earnings before interest, taxes, depreciation, and amortisation (EBITDA) grew by four per cent to Dh4.1 billion, driven by the group's solid operational performance and relentless focus on improving the customer experience through investments in digital transformation, data analytics and loyalty programs.
'Overall, Majid Al Futtaim delivered balanced growth through 2022. Positive contributions from across our portfolio, bolstered by the inherent strength of the UAE economy, have enabled the group to achieve double digital revenue growth despite the ongoing macroeconomic challenges,' Ahmed Galal Ismail, chief executive officer, Majid Al Futtaim – Holding, said.
He said the potential impact of these headwinds has been further lessened by the outstanding performance of our Properties portfolio, which has contributed 74 per cent of total EBITDA.
'We continue to uphold the values that constitute the Majid Al Futtaim institution, underpinned by solid financial standing and a robust balance sheet. We remain fully committed to delivering value-accretive profitable growth for our shareholders and contributing to the sustainable growth and prosperity of the Mena region,' he said.
Majid Al Futtaim continues to benefit from a sustained upturn in consumer confidence, reflected in an increase in shopping malls footfall, higher hotel occupancy and admissions at cinemas, leisure and entertainment venues.
Retail trends, such as consumer demand for digital and omnichannel experiences, have continued to accelerate. The group continues to be well positioned to leverage digital opportunities to invest, innovate and enhance its offering to meet consumers' evolving wants and needs.
Majid Al Futtaim remains committed to positive and sustainable economic and societal change in the region. The Group is on track to meet its commitment to achieve a positive water and energy footprint by 2040 and eliminate single-use plastic in all its operations by 2025.
In addition, Majid Al Futtaim's flagship shopping centres, Mall of the Emirates and Mall of Oman, received LEED Platinum certification, adding to the company's green certified properties which now span 4 million square metres.
In September 2022, Majid Al Futtaim signed its second Sustainability-Linked Loan (SLL), structured as a $1.25 billion Revolving Credit Facility (RCF) tied to the Group's environmental, social and governance (ESG) related targets, further reinforcing its commitment to achieving its ESG ambitions.
In addition, the Group maintained the 'Green Star' status from the Global Real Estate Sustainability Benchmark (GRESB) for implementing outstanding sustainability practices, strengthened by the progress made against its 2040 net positive commitment and greenhouse gas emissions validated this year by the Science-Based Targets initiative (SBTi). The Group also maintained its low risk ESG rating by Sustainalytics.
Operating performance
Majid Al Futtaim – Properties: Majid Al Futtaim - Properties' revenue increased by 43 per cent to Dh5.8 billion, while EBITDA grew 16 per cent to Dh3 billion. This was driven by robust performance across the hotels and communities' businesses and bolstered by the continued strong recovery across Shopping Malls, including the full year impact of City Centre Al Zahia in Sharjah and Mall of Oman in Muscat, which opened in 2021. Shopping mall footfall increased 16 per cent to 212 million visitors, whilst tenant sales grew 11 per cent.
Meanwhile, Majid Al Futtaim Hotels portfolio revenue increased 48 per cent to Dh671 million, driven by events such as Expo 2022, increased demand during Saudi holidays, and the Qatar World Cup. RevPAR (revenue per available room) and average occupancy increased by 50 per cent and 14 per cent, respectively.
In addition, real estate development Tilal Al Ghaf, recorded gross sales value of Dh4.4 billion during the year, whilst recognising revenue of Dh1.8 billion as construction progressed.
Majid Al Futtaim – Retail: Majid Al Futtaim - Retail reported a seven per cent increase in revenue to Dh28 billion in 2022, driven by renewed consumer confidence, easing of Covid-19 restrictions, and rebound in travel and tourism in countries where Majid Al Futtaim operates. Retail EBITDA declined 14 per cent to Dh1.2 billion.
The Operating Company has expanded its presence in the region, opening seven hypermarkets and 28 supermarkets across nine countries and bringing the total number of stores to more than 450.
Majid Al Futtaim Retail's long-term investment in enhancing its omnichannel offering contributed to revenue growth from digital sales by 51 per cent year-on-year basis.
Majid Al Futtaim – Entertainment: Majid Al Futtaim - Entertainment revenue increased 23 per cent to Dh1.6 billion while EBITDA grew 68 per cent to Dh126 million, primarily due to improved performance following the relaxation of occupancy restrictions and the release of strong movie content. The signing of distribution rights with Warner Bros. Pictures, which was followed by securing distribution rights for Universal in 14 countries in the Mena region starting February 2023, is expected to fuel further growth for Majid Al Futtaim Entertainment.
Majid Al Futtaim – Lifestyle: Majid Al Futtaim - Lifestyle reported revenue of Dh801 million, up 38 per cent year-on-year driven by a strong performance across its brands. The Operating Company realised EBITDA growth of 317 per cent to Dh25 million.
Future Investment
The group plans further expansion in high growth potential markets such as Saudi Arabia and Egypt, as well as in its home market, the UAE, amid a resurgence in consumer confidence.
The group will also continue to invest and expand its omnichannel presence, to ensure the business is future-proof and is delivering on the changing customer needs.
Financing
Majid Al Futtaim continues to maintain a strong financial and liquidity position. Following several refinancing actions taken through the year, the Group's debt maturity profile remains balanced, with a mix of capital markets and bank financing.
Against the backdrop of challenging macroeconomic conditions and volatile financial markets, in June 2022 the Group tendered its outstanding hybrid notes of $500 million with a first call date in September 2022 and replaced them with new green hybrid notes of $500 million with a first call date in September 2027. This was the Group's first hybrid transaction in green format and the first green hybrid bond issued by a company in the Mena region.
The company's credit rating has been maintained at 'BBB' with a stable outlook by both Standard & Poor's and Fitch Ratings. The ratings reiterate the company's credit strengths, resilience of its business model, quality of assets, strong corporate governance, and prudent financial management.
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