WHAT WE’RE TRACKING THIS WEEK Enterprise Retail, a custom briefing for CENOMI — issue #001 Good morning, ladies and gentlemen. It’s been a relatively quiet week as earnings releases lead the news cycle. We expect the news lull to end (and footfall to pick up) as we inch toward the start of the school year — schools in Saudi Arabia are back starting 18 August, the first school return in Egypt does so on 19 August, and the 2024-2025 academic year begins in the UAE on 26 August. ***
WHAT ARE YOU READING? This is a custom weekly briefing on the retail, property, and leisure markets in the Middle East and select global markets prepared for CENOMI by Enterprise, the leading news outlet in the Middle East and North Africa covering business, finance, economics, regulation, and public policy.
This is a zero issue — meaning it is a proof of concept and not yet a fully-developed product. Our aim is to refine our coverage universe and story selection based on your feedback as we progress.
*** EARNINGS CALENDAR- Abdullah Al Othaim Markets is set to release its 2Q 2024 financial results on or around 20 August. The grocery chain owner’s 1Q 2024 net income came in at SAR 116.4 mn (down 3% y-o-y) on the back of higher costs from new store openings and the drop on performance of subsidiaries among other factors. The company reported 9% y-o-y growth in revenues during the quarter to SAR 3 bn due to higher sales from existing and new stores. DATA POINT- Egyptian real estate giant Talaat Moustafa Group (TMG) has hit SAR 3.3 bn in sales at its Banan project in Riyadh since its launch in May, according to Saudi outlet Al Eqtisadiah. The SAR 31.4 bn project, located in Al Fursan, spans 10 mn sq km and is expected to house 120k residents. Apartments in the project range from 53 to 176 sqm, with price points from SAR 260.4k to SAR 1.025 mn.
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M&A WATCH | SAUDI ARABIA BinDawood closes Jumeirah Trading acquisition BinDawood has closed its SAR 186.5 mn acquisition of Jumeirah Trading, it said in a disclosure to Tadawul on Wednesday. The Tadawul-listed holding company now holds 100% of Jumeirah as it looks to expand its distribution reach, reduce supply chain risk, and improve margins through vertical integration. BACKGROUND- BinDawood lined up a no-objection decision from the General Authority for Competition (the Saudi competition watchdog) last month ; BinDawood’s board of directors approved the takeover back in May. What’s Jumeirah? It is engaged in the wholesale, retail and distribution of food, household products, toys, and luggage across Saudi. Its net income nearly doubled y-o-y in 2023 to SAR 22.2 mn, while its revenues were up 28.7% y-o-y in the same period to SAR 142.9 mn.
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CAPITAL MARKETS | UNITED KINGDOM Tesco resumes share buyback program Tesco is planning to repurchase GBP 400 mn-worth of its shares as it looks to resume its share buyback program, Britain’s biggest supermarket group said in a disclosure to the London Stock Exchange. BACKGROUND- Tesco completed the first tranche of its buyback program, purchasing more than 113.1 mn shares with a market value of c.GBP 350 mn, it said in the disclosure. The tranche was completed on 26 July. The company said in April it plans to add GBP 1 bn-worth of shares to its buyback program over the course of the following year. (** Tap or click the headline above to read this story with all of the links to our background as well as external sources.)
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PAYMENTS | SAUDI ARABIA Saudi PoS transaction volume + value dip week-on-week The number of point of sale (PoS) transactions in Saudi Arabia dipped 6.5% on a weekly basis in the week ending on 20 July, falling to 28.9 mn transactions across the country, according to the Saudi Central Bank’s (Sama) weekly transaction report (pdf). The total value of transactions processed on PoS machines fell 10.1% week-on-week to SAR 1.8 bn, the report shows. On an annual basis, the number of PoS transactions rose 24.6% y-o-y, while the value of transactions came in c. 8% higher y-o-y. Which sectors led the drop? The number of PoS transactions for jewelry purchases fell at the steepest rate out of all segments included in the report, falling 16.8% week-on-week and registering a 7.8% week-on-week decline in the value of PoS transactions. Clothing and footwear registered the second-largest week-on-week drop in the number of PoS transactions, falling 12.8% compared to the previous week. The sector also saw the second-largest week-on-week drop in terms of the value of PoS transactions, dipping 11.3%. Other segments weighing on the index include recreation and culture (-11.4%), transportation (-10.5%), and furniture (-10.3%). Why the drop? It’s summertime in Saudi — consumers are traveling abroad, school is out of session, and international tourist arrivals are insufficient (particularly in the hot summer months) to make up for lower domestic activity as the country very much remains an “emerging” travel destination. Education bucked the trend in terms of the value of transactions, rising 10.4% week-on-week, despite a 9.1% decline in the number of PoS transactions. Hotels and hospitality also eked out week-on-week growth in value terms, inching up 0.2% on a weekly basis. Riyadh continued to lead the pack as the city with the largest share of PoS transactions across the Kingdom, accounting for nearly 31% of all point of sale transactions in the country and 33% in terms of value. Jeddah comes in second, with 11.8% of the market share by volume and 14.5% by value.
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EARNINGS WATCH | UAE Abu Dhabi real estate developer Aldar Properties saw its net income after tax grow 37% y-o-y to AED 1.75 bn in 2Q 2024, according to its consolidated financial statements (pdf). The rise in earnings can be credited to “strong end-user demand and increasing global investor interest” in the UAE real estate market, Aldar said in a separate earnings release (pdf), with the developer making AED 7.7 bn in group sales during the quarter, up 10% y-o-y. Revenues came in at AED 5.3 bn, a 64% y-o-y increase. REMEMBER- In real estate, sales ≠ revenues. With off-plan sales dominating the industry, most real estate companies book a sale when you sign a contract to buy a home. But they only record (some or all) of the value of the unit it sold you when it (a) delivers the unit to you or (b) hits a percentage completion on a total project. In most cases, then, revenues are composed of sales from past periods, while sales in a given quarter will be recognized as revenues in the future when units are completed or delivered. For 1H 2024, Aldar recorded a 57% y-o-y increase in net income to AED 3.32 bn. The real estate developer and service provider’s total revenues reached AED 10.92 bn, up 73% y-o-y, driven by the successful execution of its revenue backlog from new and existing projects. Total sales in the first half came in at AED 14 bn (+21& y-o-y), with overseas and expat buyers accounting for 79% of the company’s UAE sales during the period. Looking ahead: The company’s revenue backlog reached an all-time high of AED 39 bn at the end of 1H 2024, while its UAE backlog hit a record AED 33.2 bn, expected to “[propel] revenue recognition over the next 2-3 years.” WATCH THIS SPACE- Aldar said that it expects international sales contributed by its Egypt (Sodic) and UK (London Square) units to “intensify in the coming periods” as the two units “pursue scale.”
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PURCHASING | MENA KSA, UAE, and Egypt non-oil private sector activity tell a mixed tale in July How UAE + Saudi + Egypt’s non-oil private sectors performed in July: Purchasing manager indices (PMI) tracking non-energy sectors in the three countries told a mixed tale in July: - Saudi Arabia and the UAE held above the 50.0 mark threshold but reported softening output, raising modest questions about near-term outlook;
- Egypt saw a slight drop in its headline PMI despite new export orders, improved employment rates, and a reduced backlogs.
REMEMBER- The all-important 50.0 mark is the threshold separating contraction from growth. Anything above 50 denotes expansion, while anything below indicates contraction. SAUDI ARABIA: 54.4 (down from 55.0) First up, Saudi Arabia: Non-oil business activity in the Kingdom continued to grow at a soft but steady pace in July, as output levels, purchasing activity, and new exports rose despite a lull in new orders and growing competitive pressures, according to Riyad bank Saudi Arabia PMI (pdf). The headline reading dipped to 54.4 in July, from 55.0 in June, falling for a third month straight. New order intakes increased at their lowest rate in some 2.5 years on the back of growing input costs, while selling prices dropped due to strong internal competition and capacity pressures caused by an ongoing heatwave. Output growth eased to its lowest level in six months and new orders hit their lowest mark in 2.5 years despite demand conditions pushing up sales and output growth. Purchasing activity surged at the steepest rate in three months, buoyed by growing client demand as firms look to solidify their stock inputs. Employment figures also rose modestly in July in a bid to maintain backlogs in the Kingdom’s non-oil sector despite capacity stresses due to the heatwave. Delivery speed continued to improve. Balanced input prices, cost of purchases and staff costs eased inflationary pressures, by stabilizing output prices. On a positive note: New exports also grew, indicating that “Saudi businesses are successfully penetrating international markets, which bodes well for diversification of the economy,” Riyad Bank Chief Economist Naif Al Ghaith said in the report. UAE: 53.7 (down from 54.6) Non-oil business activity rose in the UAE at the slowest pace in almost three years in July, due to competitive conditions, rising input prices, and growing backlogs, according to S&P Global’s PMI (pdf). The country’s headline reading dipped to 53.7 in July, from 54.6 in June, yet still remained firmly above the 50.0 neutral threshold. Backlogs surged in July due to supply and administrative lags, causing inventory volumes to slightly fall for the first time in almost four years as firms dug into their inputs to avoid project overruns. Businesses also noted that increased competition drove up backlogs, as non-oil firms took on more than they could handle to secure returning clients. Purchasing expenses were steep: Inflation rates grew at its fastest rate in two years, and selling prices rose, as non-oil companies experienced a spike in input costs during June. Businesses linked the rising prices to high material price costs and higher wages. Employment eased to a six month low. The silver lining: New orders rose, as demand conditions remained stable, and new exports grew at the second-strongest rate in nine months. Delivery times continued to improve at a strong rate. Generally, the UAE’s non-oil sector is “expanding solidly and could be strengthened if companies start to get on top of their workloads,” said S&P Senior Economist David Owen. EGYPT: 49.7 (down from 49.9) Egypt told a mixed tale: Non-oil activity marginally dropped in July as output and new orders fell slightly, resulting in businesses capping their purchasing rates. Still, the index remains near the two-year high it hit in June, according to S&P Global’s Egypt PMI (pdf), which dipped slightly to 49.7 from 49.9 in June. Output rates fell at a slow rate as sales weakened due higher prices and businesses themselves struggled with to inflationary pressure. New orders marginally dropped, with some 9% of businesses surveyed reporting a decline in sales and just 7% reporting an increase. Purchasing rates fell at a four-month low as companies adjusted their purchases to reflect a dip in orders. New export orders were on the rise, growing for a third consecutive month as international demand grew. Backlogs fell at their fastest rate in over a year and employment rates rose, as businesses remain optimistic that conditions will improve. Inflation remains a shadow over the non-oil market: Input prices spiked for a second month, hitting the highest rate since March, with 14% of firms reporting a rise in prices. Selling prices only modestly increased in return. SENTIMENT Sentiment was upbeat for a change in Egypt: Non-oil firms forecast a boost in activity over the next 12 months, as market optimism grew. Inflationary pressures were “subdued compared to heightened rates in recent years,” Owen said. Yet, a “slight pick-up in input cost inflation in July” could leave firms uncertain about prices picking up again in the future. While it took a dip over in the UAE + KSA: The degree of confidence in both the UAE and KSA took a hit in July, due to softened output and input growth rates. Nevertheless, in both countries the year-ahead outlook remained positive, with businesses banking on high client demand, healthy work pipelines and incoming investments.
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AROUND THE WORLD US court temporarily blocks planned Kroger-Albertsons merger + Unibail Rodamco looking to sell off assets Kroger’s consolidation push to compete with Walmart + Amazon hits snag in court: US retailer Kroger’s planned USD 25 bn merger with supermarket chain Albertsons has been temporarily blocked by a Colorado court ahead of a two-week trial on the transaction, Bloomberg reported. The merger faces separate legal challenges from the Federal Trade Commission, which argues that it could hamper competition and “would give the grocers increased leverage over workers, slowing wage growth and worsening benefits.” Kroger’s take: The tie-up is critical for both Kroger and Albertsons to remain competitive in the grocery industry “as consumers increasingly turn to larger, non-unionized rivals” such as Amazon, Walmart, and Costco, the business information service says.
French real estate group Unibail-Rodamco is in talks to sell as much as EUR 1.0 bn-worth of its assets, the company said in its 1H 2024 earnings release (pdf). The company is “actively engaged in discussions with potential buyers” for the assets as it looks to push ahead with its plans for “further deleveraging through disposals in Europe, in line with its long-standing capital recycling policy.” Unibail has been selling assets for months now: Unibail-Rodamco offloaded EUR 300 mn-worth of assets during the first six months of the year, including selling Equinoccio Park Shopping Center in Spain to Atitlan for EUR 34 mn in January, signing a sale and purchase agreement for Westfield Annapolis for USD 160 mn last month, and reaching sales agreements “on several non-core assets and land plots in France for EUR 70 mn,” according to the earnings release.
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THE MACRO PICTURE | MENA How MENA firms can use blockchain and AI to overcome supply chain challenges Regional economies are looking to use innovative tech to maintain resilience amid supply chain disruptions, according to a recent annual report (pdf) by DP World supported by Economist Impact. Although traditionally used as a supplementary tool, technology like AI and blockchain is now being used to reconfigure supply chains and MENA firms can stand to benefit from the emerging tech in the logistics sector. Behind the numbers: The report is based on a survey of 3.5k senior executives globally across a range of industries to gather information on trade and supply chain practices in addition to forecasts on the year ahead. Regions included North America, Europe, Asia Pacific, the Middle East, Africa, and South America. The World Trade Organization (WTO) expects MENA's exports to grow some 3.8% in 2024, but geopolitical challenges are hindering trade in the region. The war on Gaza has worsened supply-chain disruptions in the Red Sea — a key shipping route for Saudi and UAE trade with Europe. The result has been upward pressure on shipping rates as operators opt to steam around the Cape of Good Hope instead. How can new tech work around supply chain disruptions? In addition to supply chain reconfiguration and expansions into new markets, robotics and automation have been proven to enhance supply chain management by reducing long-haul expenses, boosting work productivity, and reducing errors. MENA economies can benefit from integrating block chain technology to improve transparency, as they can better track goods and detect fraud. AI by the numbers: 39.6% of business leaders worldwide indicated that they had integrated AI in optimizing customer experience in 2023, 34.8% adopted the tech in forecasting demand, and another 34.6% in advancing inventory levels, according to the report. 34.5% used the tech in identifying potential supply-chain disruptions. The scale of the developments indicates that AI has a profound impact on the operational efficiency of business and supply chains. What about blockchain? Blockchain has also been used to enhance accessibility and efficiency of supply-chain management. Almost 58.9% of businesses deployed blockchain technologies in 2024, and 27.5% planned on using it, according to the report. Blockchain helps detect fraud and errors, streamline operational processes, and reduce costs. Tech in KSA and UAE: Almost 35% of companies are adopting automation and robotics to boost efficiency, 31% are planning to use AR/VR for troubleshooting and repairs, and 26% are opting for 3D printing customization and decentralized production, DP World says. A boon for productivity: Emirati food supplier Aramtec deployed a warehouse automation system by UAE-based digital solutions provider Zebra to meet growing customers needs and changes in its supply chain. The move to automated systems — deployed at Aramtec’s distribution centers — aimed to increase its worker productivity by 14%. Tech in Egypt: About 33% of firms in Egypt plan to integrate advanced automation for logistics efficiency, with 28% seeking to adopt blockchain for traceability and 23% looking to use 5G to increase connectivity, speed, and reliability, DP World says. “At the Port of Ain Sokhna, our technology has improved truck turnaround times by 35% and vessel productivity by 16%. We’ve also introduced multi-channel payment solutions and customer self-service applications for real-time data access, enhancing cargo control and visibility,” DP World for North Africa & the Indian Subcontinent CEO Rizwan Soomar told Egyptian news outlet Al Alam Al Youm in an interview last March.
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CALENDAR CIRCLE YOUR CALENDAR- Saudi Arabia will host the Saudi Warehousing and Logistics Expo on Monday, 2 September to Wednesday, 4 September in Riyadh. The event will bring together leaders in the supply chain, warehousing, and logistics industry from across the Kingdom to discuss investments, trade, geopolitical risks, and localized manufacturing. AUGUST 12-15 August (Monday-Thursday): The Saudi Food Expo, Riyadh, Saudi Arabia. 28-30 August (Wednesday-Friday): Anuga FoodTec India, Bombay Exhibition Center, Mumbai, India. SEPTEMBER 3-6 September (Tuesday-Friday): World Food Istanbul, TUYAP Fair and Congress Centre, Istanbul, Turkey. 4-6 September (Wednesday-Friday): Asia Fruit Logistica, AsiaWorld Expo, Hong Kong. 16-19 September (Monday-Thursday): Foodex Saudi, Riyadh, Saudi Arabia. 23-25 September (Monday-Wednesday): Food and Hospitality Oman, Oman. OCTOBER 22-24 October (Tuesday-Thursday): Seamless Saudi Arabia, Riyadh Front, Saudi Arabia. 29-31 October (Tuesday-Thursday): Future Investment Initiative Conference, Riyadh. 2025 JUNE 2025 Food Business Forum, Dubai, UAE. |
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