Majid Al Futtaim, one of Dubai’s biggest private sector conglomerates and the Middle East's largest malls operator, swung to a profit in 2021 amid continued economic recovery in the region and despite lingering pandemic-related uncertainties.
Group net profit for the 12 months to the end of December surged to Dh2.46 billion ($670 million) from a net loss of Dh2.71bn recorded a year earlier, the privately held company said in a regulatory filing to Nasdaq Dubai, where its debt trades.
Earnings before interest, taxes, depreciation and amortisation rose to Dh3.91bn at the end of last year from Dh3.76bn in the 2020 financial year.
Revenue during the reporting period dropped 1 per cent year-on-year to Dh32.29bn.
“2021 was a year of evolution and renewal for the group,” Majid Al Futtaim said in the bourse filing.
“The business had to address the challenges of new Covid variants and their impact on the regional and global economic environment, which included supply-side shortages, disruptions to labour markets, production and supply chain bottlenecks, fluctuations in global energy markets, as well as shipping and transportation constraints, all adding to existing inflationary pressures.”
The company, which owns and operates 29 shopping malls, 13 hotels and five mixed-use communities, said the comprehensive vaccine programmes and robust pandemic mitigation plans across the region led to a relaxation in travel restrictions.
The subsequent increase in consumer spending drove an overall growth in consumer confidence across the GCC, it said.
The retail industry was heavily affected by the Covid-19 pandemic, which led to border closures and movement restrictions in 2020. However, many countries, particularly the UAE, have rebounded strongly due to mass testing and vaccination programmes.
The start of Expo 2020 Dubai in the fourth quarter of last year also contributed to positive business and consumer sentiment that helped Majid Al Futtaim's earnings.
“With over 10 million visits at the end of January 2022, Expo 2020 has been a catalyst for growth in the region, driving increases in hotel occupancy and residential real-estate prices,” the company said.
Against the positive backdrop, Majid Al Futtaim has maintained robust cash flows and a strong balance sheet, ending 2021 with “a good performance across all its operating units”.
The company’s properties business revenue grew 26 per cent to Dh4.41bn, despite temporary closures and the impact of Covid-19 on footfall and sales.
“Following the swift roll-out of vaccinations, footfall and sales are picking up,” it said.
Majid Al Futtaim's retail business registered a 6 per cent decline in revenue to Dh26.3bn. The business started the year facing continued geopolitical and economic headwinds but improved by the end of the second quarter as tourism picked up.
It further gained momentum in the third and fourth quarters although the business remained affected throughout the year, Majid Al Futtaim said.
Revenue from Majid Al Futtaim’s leisure, entertainment and cinemas business grew 65 per cent to Dh1.3bn from a low base in 2020.
“New content releases and the easing of restrictions are contributing to increased revenue and footfall,” the mall operator said.
Majid Al Futtaim's lifestyle business reported revenue of Dh580m at the end of last year, up from Dh413m reported for 2020.
The company said it remained focused on generating and preserving cash by driving trade through promotions. It strengthened its online offer and capacity, managed working capital and optimised supplier payment terms, which led to cash flow from operations reaching Dh5.28bn.
“The group continues to manage its balance sheet to ensure that shareholders’ wealth is protected while simultaneously ensuring it remains well-positioned to fuel future growth opportunities.”
Majid Al Futtaim's net debt at the end of last year declined to Dh11.98bn, a reduction of Dh414m from the 2020 level.
Despite entering 2022 in a strong financial position, the company said pandemic-related risks that could affect the business remain.
“2022 is starting on a firm footing, with the region set to benefit from continued policy innovation, a rebound in tourism and a gradual global recovery. Covid-19 variants may continue to present some risk to the outlook, but the underlying drivers of growth remain firm,” the company said.
“Majid Al Futtaim is well placed to benefit from the improving conditions and has started to see positive signs through higher footfall, increased consumer spending and an uptick in hotel occupancy levels.”
Earlier in February, the conglomerate said it would continue to operate normally as a special judicial committee looks into potential inheritance issues among 10 heirs of its late founder.
The special judicial committee has been set up to oversee the transition period after the passing of founder Majid Al Futtaim in December.
The company on Wednesday said the group remains fully owned by Majid Al Futtaim Capital. Its late founder owned 99.6 per cent of the shares in the parent and the rest is owned by Tariq Al Futtaim, a non-executive director. The inheritance will be passed on to 10 heirs, including Mr Tariq, it said.
“All current decision-making authorities and accountabilities within the delegation of authority to the boards and to management remain in effect, ensuring the group and its businesses continue to operate as normal,” it said.
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A new relationship with the old country
Treaty of Friendship between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates
The United kingdom of Great Britain and Northern Ireland and the United Arab Emirates; Considering that the United Arab Emirates has assumed full responsibility as a sovereign and independent State; Determined that the long-standing and traditional relations of close friendship and cooperation between their peoples shall continue; Desiring to give expression to this intention in the form of a Treaty Friendship; Have agreed as follows:
ARTICLE 1 The relations between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates shall be governed by a spirit of close friendship. In recognition of this, the Contracting Parties, conscious of their common interest in the peace and stability of the region, shall: (a) consult together on matters of mutual concern in time of need; (b) settle all their disputes by peaceful means in conformity with the provisions of the Charter of the United Nations.
ARTICLE 2 The Contracting Parties shall encourage education, scientific and cultural cooperation between the two States in accordance with arrangements to be agreed. Such arrangements shall cover among other things: (a) the promotion of mutual understanding of their respective cultures, civilisations and languages, the promotion of contacts among professional bodies, universities and cultural institutions; (c) the encouragement of technical, scientific and cultural exchanges.
ARTICLE 3 The Contracting Parties shall maintain the close relationship already existing between them in the field of trade and commerce. Representatives of the Contracting Parties shall meet from time to time to consider means by which such relations can be further developed and strengthened, including the possibility of concluding treaties or agreements on matters of mutual concern.
ARTICLE 4 This Treaty shall enter into force on today’s date and shall remain in force for a period of ten years. Unless twelve months before the expiry of the said period of ten years either Contracting Party shall have given notice to the other of its intention to terminate the Treaty, this Treaty shall remain in force thereafter until the expiry of twelve months from the date on which notice of such intention is given.
IN WITNESS WHEREOF the undersigned have signed this Treaty.
DONE in duplicate at Dubai the second day of December 1971AD, corresponding to the fifteenth day of Shawwal 1391H, in the English and Arabic languages, both texts being equally authoritative.
Signed
Geoffrey Arthur Sheikh Zayed
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Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
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Key figures in the life of the fort
Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.
Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.
Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.
Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.
Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.
Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.
Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.
Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.
Sources: Jayanti Maitra, www.adach.ae
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Key facilities
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