Dubai: “The Gulf”
Majid Al Futtaim announced its final and audited operational and financial results for the year 2020. The company recorded total revenues of 32.6 billion dirhams, down 7%, and EBITDA retreated by 19% to 3.8 billion dirhams. The pressure imposed by the COVID-19 pandemic. While the value of the company’s assets decreased by 6% to about 59.1 billion dirhams. Alan Bejjani, CEO of Majid Al Futtaim Holding, said: “Despite the exceptional events that we have witnessed during the year 2020, Majid Al Futtaim has demonstrated its ability to overcome challenges thanks to the qualifications and skills of the work team, and the flexibility and diversity of our business model. The speed of response to changes and the prudent management of financial risks, in addition to the proactive investment vision.
Significant growth of some businesses
Bejjani added: “The repercussions of the pandemic that the world is witnessing are not only a financial crisis, but rather a major crisis in restoring confidence. Majid Al Futtaim was founded on solid values and foundations that enable us to withstand adverse economic conditions. Therefore, our priorities are focused on maintaining the safety of customers and the work team, restoring confidence and continuing to apply all sustainability practices. Indeed, the fact that some of our businesses recorded remarkable growth rates during this turbulent year, is evidence of the need to give top priority to supporting the communities in which we are located, preserving environmental resources, and ensuring collective progress and growth. For me, those are the principles of “social capitalism,” and it makes me optimistic about our future. “
The Covid-19 pandemic has caused a state of turmoil that affected the company’s business and commercial activities to varying degrees due to the imposition of temporary closure of destinations, restrictions on movement and movement, supply chain challenges, in addition to consumer behaviors that have become more cautious.
With the start of easing restrictions imposed by the pandemic during the second half of 2020, many sectors have gradually resumed their activities with the aim of recovering gradually, in parallel with the increase in consumer confidence in the precautionary measures and measures related to public health that are strictly applied according to the guidelines of the concerned health authorities in the markets in which the company is present . Majid Al Futtaim succeeded in achieving many successes and was able to continue diversification efforts to face the pandemic conditions thanks to the quality of its assets and its flexible business model, in addition to the company’s firm commitment to financial discipline, which contributed strongly to recording these results.
Since the start of the pandemic, Majid Al Futtaim has adopted a strategy of providing priority to stakeholders and parties concerned with its work, which included strengthening its cooperation with governments in all markets in which it operates to identify and implement measures and measures to limit the spread of the virus and overcome supply chain challenges. In order to ensure a sustainable supply of fresh fruits and vegetables at the level of the Emirates, “Majid Al Futtaim” entered into a partnership with the Ministry of Climate Change and Environment in the country, to enhance the availability of locally grown products in Carrefour stores, by opening new distribution channels to more than 6000 Small and medium sized local farmer.
In light of the temporary closure measures imposed by the authorities concerned with containing the pandemic, the company was keen to suspend the collection of the rental value of stores in 27 shopping centers in five markets in order to reduce the financial burden on tenants during the temporary closure period.
The company has also accelerated its digital transformation to enhance its online capabilities and provide innovative sales channels for tenants and small companies through new platforms that enable them to communicate with their customers. This included the launch of the “electronic market” and the “latest fashion this season” platform that brings you to your doorstep. Over the past year, Majid Al Futtaim has continued the process of integrating its traditional system with the digital world, by introducing innovative applications, including “Take It Yourself” and “Scan and Go.” The company has also strengthened its capabilities in this field by cooperating with the Department of Economic Development in Dubai, Aramex and the Dubai Taxi Corporation to ensure the speed and efficiency of meeting customers ’electronic requests for the“ Carrefour ”store.
Once the restrictions began to be eased, Majid Al Futtaim continued its customer-centric approach by launching Food Central in City Center Deira to provide a completely unique dining experience at the shopping center in response to changing consumer habits.
Despite these circumstances, Majid Al Futtaim succeeded in maintaining its commitment to the goals of its sustainability strategy throughout the pandemic period, and this included continuing its efforts to achieve the goals of “positive outcomes” by 2040, in addition to its pledge to phase out single-use plastic materials at the level of Its operations by 2025. In addition, the company has launched its ambitious strategy for the circular economy, which outlines its roadmap towards the actual implementation of this strategy aimed at eliminating waste polluting the environment and sustaining the use of natural resources across all of the company’s operations over the next ten years.
Business unit performance
21% decline in profits of “Al-Aqaria” Majid Al Futtaim Real Estate: Compared to 2019, the company’s real estate activities recorded a decrease of 24% in terms of revenues and 21% in EBITDA to reach 3.5 billion dirhams and 2.3 billion dirhams. Straight.
The business of shopping centers also witnessed a decrease in revenues due to the temporary closure of destinations across the country and the proactive decision to suspend the collection of rental value during the same period, and the application of more flexible mechanisms to pay rent values to support tenants. However, the second half of last year witnessed a gradual recovery through the increasing demand for the company’s destinations, in conjunction with the decisions to ease restrictions and reopen. Majid Al Futtaim’s hotels have witnessed a 60% decrease in occupancy rates due to the prolonged closure and lower demand due to travel restrictions and reduced carrying capacity.
14% retail profit growth
Majid Al Futtaim Retail: In 2020, Carrefour business recorded a 1% decrease in revenue to reach AED 28 billion, while EBITDA grew by 14% to reach AED 1.6 million.
Majid Al Futtaim Retail recorded an increase in the percentage of online sales amounting to 188% in all markets, including a 3% contribution to the company’s total revenues for the year 2020. This surge came in response to the changing behavior of shoppers and their rapid orientation towards electronic shopping as an alternative to actual shopping due to temporary closure procedures. And the application of precautionary health measures through physical distancing, and this has provided the company with the opportunity to accelerate its digital capabilities and enhance its readiness to implement electronic order receiving and delivery processes, by opening four new centers to fulfill online requests at the regional level.
Majid Al Futtaim Retail also continued implementing its expansion projects for Carrefour stores and increasing its presence in international markets by opening the first Carrefour store in Uzbekistan, despite the disruptions caused by the pandemic.
Projects most affected by the pandemic
Majid Al Futtaim Enterprises: Majid Al Futtaim Enterprises was among the most affected by the consequences of the pandemic, as its revenue decreased by 49% and by 122% in EBITDA for this year, to reach 1.4 billion dirhams and -92 million dirhams, respectively. .
This decrease is largely due to the closure measures imposed by the official authorities due to the pandemic, which required the closure of entertainment and cinema destinations for a long period, in addition to the lack of production of cinematic content worldwide. With the start of facilitating procedures during the second half of 2020, customers began to gradually return to enjoy what the entertainment sites offer in the company’s destinations.
During the current year 2021, Majid Al Futtaim will continue its efforts to support all concerned parties, including government agencies where the company’s business is located in many countries, as well as work to restore full commercial and social activity and continue sustainable economic development supported by its disciplined approach to financial management.
City Center Al Zahia
The company reaffirms its full commitment to the markets in which it operates, and to providing new shopping experiences to customers by announcing the opening of Mall of Oman and City Center Al Zahia in Sharjah later this year.
The opening of 30 cinemas in Saudi Arabia in 2021
Majid Al Futtaim Retail will continue its expansion plans, which include opening new Carrefour stores in Kenya, Uganda and Uzbekistan. The company is also working to implement its plans to open many stores during the next five years in Egypt, develop its presence in Saudi Arabia and raise its capabilities in the field of e-commerce to meet the growing demand over the Internet at the regional level. In addition to continuing to implement plans to expand VOX Cinemas’ presence in Saudi Arabia, with the opening of 30 new cinemas in 2021.
Financing Majid Al Futtaim maintained its strong financial position and liquidity with sufficient cash reserves to cover its net financing needs for the next three years. Majid Al Futtaim also has a light file regarding debt maturity over the next two years, with no material debt due until 2023, and a net debt reduction to 12.4 billion dirhams through a strict focus on cash flow at the company level.
Despite the current difficulties facing the macroeconomic situation, the company has maintained its credit rating at BBB with a stable outlook, according to the latest reports by Standard & Poor’s and Fitch Ratings. This reflects the company’s sound financial liquidity position, the resilience of its diversified business model, the proactive and rapid approach to tackling the COVID-19 crisis and prudent financial management.
Dubai: “The Gulf”