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Retail sales are booming. Charles Crowell for The National
Retail sales are booming. Charles Crowell for The National

Big spending Middle East shoppers raise Majid Al Futtaim revenues

Majid Al Futtaim, operator of malls and Carrefour Hypermarkets in the Middle East, has benefitted from a revival in the retail sector in the first half of the year.

One of the region’s biggest mall developers has cashed in on a retail revival as shoppers shook off political unrest in parts of the Middle East.

Majid Al Futtaim (Maf), which operates Carrefour hypermarkets across the Middle East, said sales jumped 15 per cent to more than Dh10 billion (US$2.72bn)in the first half, compared with the same period last year.

It opened six new Carrefour hypermarkets in the first half of the year, bringing the total to 49 hypermarkets and 38 supermarkets.

Profit from recurring operations increased by 17 per cent to Dh1.5bn in the first half, compared with the same period a year earlier.

“We have seen turnarounds in markets previously impacted by the Arab Spring,” said Iyad Malas, Maf’s chief executive. Tenant sales grew by about 44 per cent in Egypt and about 23 per cent in Bahrain in the first half of the year.

Income from the company’s six malls in the UAE and two in Oman increased 13 per cent, Mr Malas said.

The developer behind the City Centre brand wants to open as many as 10 malls in five years, with a potential investment of several billion dirhams. It opened its 11th mall, Fujairah City Centre, this year and has developments underway in Beirut and Cairo.

“Our shopping mall strategy remains focused on strengthening our regional shopping mall presence, with developments in both Lebanon and Egypt moving forward and strategic opportunities in … Saudi Arabia, Abu Dhabi and Azerbaijan under review,” said Mr Malas.

“We are continuing expansion of the Carrefour franchise, with plans to open two additional hypermarkets in the remainder of 2012, including our first store in Georgia this month.”

Mafhas a total retail area of more than 800,000 square metres across the region. In the UAE, retailers have reported strong spending this year as consumer confidence increases.

Majid Al Futtaim Properties, the company’s shopping mall arm, increased revenues by 16 per cent to Dh1.5bn in the first half compared with the same period last year and profits before interest and tax rose by 12 per cent to Dh970m, making up about 64 per cent of the group earnings.

Majid Al Futtaim Retail, the Carrefour hypermarket operator, saw its revenue increase by 15 per cent to Dh8.9bn and profit before interest and tax rise by 23 per cent to Dh467m.

Meanwhile, Majid Al Futtaim Ventures, which looks after the group’s fashion franchises, activities such as Ski Dubai and its finance arm, saw revenues grow by 11 per cent to Dh388m and profits before interest and tax rise by about 44 per cent to Dh83m.

Total assets of the whole Majid Al Futtaim group were Dh37bn at the end of the first half and net debt was Dh7.3bn.

MAF issued a $400m sukuk in February and a $500m bond in July. It has a total bond programme worth $2bn in place.

“We expect the performance of the group’s Dubai-based assets to compensate for weaker performances in Egypt and Bahrain this year and this seems to be the case. Strong cash-flow generation for the group as a whole should enable it to continue implementing its growth strategy without weakening its financial leverage metrics,” said the Standard & Poor’s credit analyst Tommy Trask.

“The maiden bond and sukuk issued in 2012 are trading well above par, so investors should be pleased with their investments and open to future issuance from the group. And we continue to categorise the group’s business risk profile as ‘satisfactory’.”

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