Saudi mall operator Arabian Centres' profit almost triples as revenue surges

Footfall for the current fiscal year is approaching the levels witnessed in 2019, the last full year before the Covid-19 pandemic struck

Makkah Mall, one of the shopping malls operated by Arabian Centres. The company presently owns, operates and manages 21 commercial centres and complexes in 10 Saudi cities. Reuters

Arabian Centres Company, Saudi Arabia's biggest mall operator, has posted an almost three-fold surge in its second quarter fiscal 2023 net profit, driven by the growth of its operations across its portfolio of properties and a surge in revenue.

Net profit after zakat leapt 171 per cent to 246.4 million Saudi riyals ($65.7m) in the three month period to the end of September, from 90.8m riyals a year ago, the Riyadh-based company said in a filing on Thursday to the Tadawul, where its shares trade.

Revenue for the period rose 15 per cent to 573.7m riyals, from the same period in fiscal 2022, while operating profit almost doubled to 350.2m riyals from 183.1m riyals a year earlier.

For the first half of its fiscal 2023 year, the company's net profit soared 72 per cent to 374.1 riyals from the same period last year.

Six-month revenue rose 13 per cent to about 1.14 billion riyals from the year-ago period.

Arabian Centres' shares were up 1.26 per cent as of 12.30pm in Riyadh on Thursday.

“The company’s strong performance in both the first half and second quarter of the financial year is a testament to the ability the organisation has demonstrated in remaining nimble, efficient and resilient through the past two years," said Alison Rehill-Erguven, chief executive of Arabian Centres.

Arabian Centres' strong financial results run in parallel with the revival of Saudi Arabia's retail sector as Covid-19 restrictions have been largely removed, allowing the wider mall and retail industries within to capitalise.

The retail sector in Saudi Arabia, the Arab world's biggest economy, is projected to grow 20 per cent by the end of 2022, according to Euromonitor, and is also important to employment in the kingdom.

Saudi Arabia's Minister for Human Resources and Social Development last year had asked malls — including restaurants, cafes and supermarkets — to boost their contributions to the labour force by increasing the percentage of citizens hired, as part of a programme to create 51,000 jobs as the kingdom seeks to reduce unemployment.

Arabian Centres said footfall for the current fiscal year is approaching the levels witnessed in 2019, the last full year before the pandemic struck. The footfall in the first half surged 42 per cent to more than 57 million, it said.

Tenant occupancy rates also remained high, hitting 94 per cent at the end of September, up from the 92 per cent rate in the year-ago period.

Arabian Centres also attributed its results to the recent programmes its board of directors approved for the sale of noncore assets. On Monday, it signed an agreement with Adeer Real Estate for the sale of assets worth 2bn riyals.

That pact followed recent approval to sell an identified portfolio of noncore land bank assets, with a book value of about 1.2bn riyals and a market valuation estimated at more than 2bn riyals.

The first sale from the programme, announced in October, was for 17,733 square metres of land located in the Olaya district of Riyadh.

The "solid initiatives" will help Arabian Centres deliver on its strategic priorities and help the company generate about 2bn riyals of value, Ms Rehill-Erguven said.

Arabian Centres, which was founded in 2002, said it will continue to focus on the development of its new generation of lifestyle projects, with several flagship projects under way. These include the Jawharat projects in Riyadh, Jeddah and Al Khobar.

Construction of two new UWalk malls in Jeddah and Al Qassi are continuing, with both locations slated to open in 2023.

The company presently owns, operates and manages 21 commercial centres and complexes, with more than 4,300 stores, throughout 10 Saudi cities, with a total gross leasable area of almost 1.3 million square metres.