UAE Mall Operator MAF’s Profit Up As Egypt, Bahrain Units Recover

Mall operator Majid Al Futtaim (MAF) reported a 17-percent rise in half-year operating profit on Monday as te nant re venues i n Bahrain and Egypt, dampened by Arab Spring unrest, rose, boosting the Dubai-based firm’s income.

Unlisted MAF, the franchisee for Carrefour hypermarkets in 19 countries and operator of 11 malls across the Middle East and North Africa, said its operating profit was 1.5 billion dirhams ($408.39 million) for the six months to June 30. This compares with operating profit of 1.29 billion dirhams in the year-earlier period.

Revenue rose 15 percent to 10.75 billion dirhams.

MAF’s property division, which includes its mall and hotel operations, reported a 16-percent rise in revenue to 1.5 billion dirhams, contributing 970 million dirhams of group operating profit.

“We have seen turnarounds in markets previously impacted by the Arab spring,” MAF said in a statement, adding tenant sales in Egypt and Bahrain rose 44 and 23 percent respectively year-on-year. MAF’s mall tenants pay a basic rent plus a proportion of their sale revenue to the developer.

In 2011, MAF took writedowns of 300 million dirhams on its hotels in Bahrain and 250 million dirhams on its Egypt operations.

Tenant sales in the United Arab Emirates and Oman were up 13 percent year-on-year.

MAF’s lower-margin retail division, which includes its Carrefour franchises, made an operating profit of 467 million from sales of 8.9 billion dirhams, which were up 15 percent year-on-year.

MAF’s Chief Executive Iyad Malas, speaking at the Reuters Retail and Consumer Summit last week, said he expected 2012 revenue growth to be in line with last year when gross revenue rose 10 percent to 19.6 billion dirhams.

The firm said it was reviewing “strategic opportunities” in Saudi Arabia, Abu Dhabi and Azerbaijan, while new developments in Lebanon and Egypt were moving forward. It also plans to open two more Carrefour hypermarkets by year-end, including its first store in Georgia.

MAF issued a $400 million debut sukuk in February and a $500 million, seven-year bond in July.

“The group’s liquidity position is sufficient to cover over two years of its financing requirement,” MAF added. “Financing initiatives are now focused on improving the profile of the company’s debt portfolio such as reducing secured debt, refinancing to achieve more flexible and improved terms.”

Reuters