Majid Al Futtaim posts flat earnings on higher costs and lower hotels profit

Majid Al Futtaim (MAF) has reported flat first-half earnings, citing higher costs and weaker hospitality industry profits.

It said earnings before interest, taxes, depreciation and amortization (Ebitda) remained stable at Dh1.8 billion despite a 7 per cent rise in revenue to Dh13.7bn from the same period last year.

The result reflects “higher promotional activities, costs associated with new market entries, product mix impact and a softer market in the hospitality industry”, according to the conglomerate, which operates malls, retail and leisure businesses.

MAF, which plans to double in size within five years, said property revenue and Ebitda held steady at Dh2bn and Dh1.2bn respectively, as the number of mall visitors rose just 2 per cent to 85 million in the first half. Visitor numbers were affected by expansion work at Mall of the Emirates, which the company operates.

Occupancy at its hotels was 77 per cent, but revenue per available room, an industry standard, fell 11 per cent.

Retail Ebitda increased 3 per cent to Dh563 million, weighed by higher costs of new market entries and new store openings.

“Several large-scale projects are under construction in existing and new markets,” said , Alain Bejjani, MAF’s chief executive.

“Dubai remains the core of our business and we are expanding our presence in Egypt, Saudi Arabia and Oman, in addition to looking to establish a foothold in Africa and Eurasia.”

MAF has businesses across the Middle East and North Africa and holds the Carrefour hypermarket franchise for the region.

It is bullish about Egypt, having announced this year its plan to increase its investment in the North African country to 22.5 billion Egyptian pounds (Dh10.5bn) from 18bn pounds.

The company is set to embark on a mall-building spree in Egypt as it prepares to open Africa’s first indoor ski slope.

“The company continues to maintain a balanced debt profile and sufficient liquidity covering approximately two years of gross financing needs through its cash and available committed lines,” MAF said.

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