Majid Al Futtaim Reports Strong Financial Performance for 2013

Key Highlights:

Note:  The following information is a trading statement based on management accounts.  Audited numbers will be included in the announcement of the full-year 2013 results.

• Overall group revenue up 10% year-on-year to AED 23 billion
• EBITDA up 12% year-on-year to AED 3.3 billion
• Strong balance sheet with assets over AED 39 billion
• Purchase of 25% minority stake owned by Carrefour S.A. in Majid Al Futtaim Hypermarkets LLC for AED 2.55 billion
• Issued CEEMEA’s first ever USD denominated corporate hybrid bond
• New brand direction unveiled to link the business units
• Opened Beirut City Centre, Majid Al Futtaim’s first shopping mall in the Levant region, and added 8 new Carrefour hypermarkets and 10 supermarkets during the year
• Improved debt profile with significant reduction in secured debt to less than 10% of total debt and early refinancing of maturities via syndication of a USD 1.6 billion (AED 5.9 billion) revolver line
• Maintained BBB credit rating and stable outlook with both Fitch and Standard and Poor’s

Dubai - Majid Al Futtaim today reported its preliminary and unaudited operational and financial results for the year ended 31 December 2013, confirming another year of strong performance across its businesses.

Financial summary: FY 2012 versus FY 2013

2013 was another year of strong operational performance for Majid Al Futtaim, with total revenues reaching AED 23 billion, growing by 10%. EBITDA from recurring operations grew by 12% year-on-year to reach AED 3.3 billion.

Majid Al Futtaim continues to maintain a strong balance sheet with total assets valued at over AED 39 billion and a net debt of around AED 7 billion. An investment-grade rating of BBB was once again re-affirmed in 2013 by both Standard & Poor’s and Fitch Ratings.

Commenting on the company’s performance, Iyad Malas, Chief Executive Officer - Majid Al Futtaim Holding, said: “This was another very good year for the company. We have not only delivered robust business results but have also united our companies under one umbrella corporate brand – Majid Al Futtaim – as we embark on the next chapter of our expansion plans.”

Business Units’ Performance

Properties, the leading MENA region developer, owner and manager of shopping malls and developer and investor in hotels and mixed-use developments, saw its revenue increase by a strong 13% to AED 3.5 billion and EBITDA rise by around 14% to AED 2.2 billion, contributing about 67% of the group’s EBITDA. The company’s malls saw footfall of 157 million through the period, an increase of 7% from 2012 levels, while revenue per available room at the company’s 11 hotels increased by 20% from prior levels.

Retail, the business unit that operates the Carrefour franchise completed a strategic acquisition of the minority shareholding from Carrefour SA to become 100% owner of its retail business. The company also extended the scope of its franchise agreement with Carrefour S.A. to include several new markets in Africa and Central Asia.  The operating performance saw 9% growth in sales during 2013 with revenues rising to AED 18.7 billion. The business’s EBITDA rose by 9% to AED 1 billion, contributing 31% of the group’s EBITDA. In 2013, Majid Al Futtaim Retail added 8 new hypermarkets and 10 new supermarkets, expanding its portfolio to 56 hypermarkets and 53 supermarkets in 12 countries across the Middle East, North Africa and Central Asia.

Ventures is a diverse group of companies that complement the core business via leading presence in cinemas, leisure and entertainment, financial services and fashion. The group also recently expanded into healthcare. In 2013, Ventures achieved strong operational growth with revenue increasing by 16% to AED 891 million.  The business successfully opened 3 new Magic Planets, 4 VOX Cinemas and 11 fashion stores and the first multispecialty healthcare clinic. EBITDA for the year was at AED 148 million, an increase of around 1% driven by the investments made for future growth.

New brand direction and growth plans

In December 2013, the company unveiled a new brand direction to unite its broad group of companies under one umbrella corporate brand – Majid Al Futtaim. The rebrand signifies a major investment in the company’s future as it prepares for expansion in both new and existing markets. 

The all-encompassing brand strategy adopts the iconic symbol of ‘M’ across the visual identity of the company’s brands to create a unifying mark of excellence across its diverse set of assets including City Centre Malls, VOX Cinemas, Carrefour, Magic Planet, Najm Credit Cards, Ski Dubai and Mall of the Emirates. Through this rebranding, Majid Al Futtaim aims to strengthen the understanding of its offerings and create a closer link between its corporate brand and its assets, along with the assurance of excellence associated with the Majid Al Futtaim name behind the brands.

Expansion plans

Several large scale projects are currently under construction in both existing and new markets.

In an initiative to support the “Dubai 2020” tourism vision, Majid Al Futtaim has major plans to invest over AED 3 billion on extending and enhancing its Dubai businesses over the next five years. The plans include: two new hotel developments; renovating two existing hotels; redeveloping its flagship Mall of the Emirates and Deira City Centre shopping malls; opening four new Carrefour supermarkets and two new hypermarkets; as well as building a new 14-screen cinema complex.  The company is also evaluating additional expansion options in Dubai that include the development of a new community mall.
 
Mr. Malas commented, “We continue to make significant progress with key organic growth in the retail market. In 2013, we expanded our footprint into the Levant region through the opening of Beirut City Centre. Future growth in the Middle East and North Africa will be driven by regional large-scale expansion plans for our portfolios in Egypt in addition to new malls envisaged in the Kingdom of Saudi Arabia and Oman, and residential projects in Lebanon, in addition to hypermarkets, cinemas, family entertainment centres and snow park openings. These expansion plans will be carried out with the careful attention to quality, responsibility to community and last but not least, prudent financial and risk management approach, which is typical of Majid Al Futtaim.”

Financing

Majid Al Futtaim Holding has continued to maintain its strong financial and liquidity position, while hitting several new milestones. In 2013, the company issued the first ever USD denominated corporate hybrid from the CEEMEA region to partially fund the AED 2.55 billion minority share purchase from Carrefour S.A. “In line with our pro-active & conservative financial approach, we chose to preserve debt capacity for future organic growth. Therefore, we opted for a subordinated security issuance which qualifies partly as equity to fund this one-off but substantial acquisition. The instrument gets full equity treatment under IFRS and qualifies for 50% equity within credit rating analysis,” Mr. Malas explained.

Majid Al Futtaim listed its USD 400 million sukuk and USD 500 million conventional bond on NASDAQ Dubai in July 2013. The company also received the 2013 Islamic Finance award for the sukuk from His Highness Sheikh Mohammed Bin Rashid Al Maktoum. 

The company successfully completed a pre-financing of maturing debt via a USD 1.6 billion revolver line syndication with a group of international and regional banks.  “Our liquidity position is sufficient to cover the financing needs over next 2-3 years. Having said that, the company will continue to look at further debt optimisation plans opportunistically,” Mr. Malas said. “We continue to stay committed to proactively managing our financing needs & plans within our credit rating and to ensure that we have the most appropriate capital structure to drive our future growth,” he added.