COVID-19 a nuclear bomb in companies' balance sheets, says Alabbar

UAE - Covid-19 proved to be a 'nuclear bomb' into the balance sheet of companies and recovery from the pandemic seems to be a long U-shaped one, said Mohamed Alabbar, chairman of Emaar Properties.

Speaking during the Annual Investment Meeting held digitally, he said companies that were built carefully, have reserves, manage their debt very well and have acquired the best talent will have a better chance to cope with the crisis.

"I am lucky enough to operate in different fields. If you look at my real estate business, we have not done well. Our revenues come from sales and the sales are not coming through the digital channel. If you're to look at e-commerce business, in the first months, we had to struggle because warehouses and retails were locked, so we had logistics operators who really can't move out. We had an issue of supply chain," he said during the panel discussion about a digital, sustainable and resilient future.

The three-day Annual Investment Meeting 2020 began on Tuesday where a large number of public and private leaders from the UAE, the region and other parts of the world will address the audience digitally.

Alabbar said: "Some businesses are suffering more than others. Our hotel suffered because tourism is almost dead. Cities where retail depends on local consumption and tourism are also affected. Entertainment is totally destroyed. Even people think food and food delivery is not healthy. But people were scared even to place an order during pandemic, so they're cooking at home. Real estate is a having a hard time because people are not confident what will happen to the cycle of the economy. People are not sure about their jobs."

For the Emaar chairman, the pandemic has caused so much uncertainty that it is difficult to predict anything anymore.

"What keeps me awake at night is that we still have months and few quarters before we need to know what is happening. We are still learning and it is going to be a long U-shaped recovery. The effect on societies is huge for people to go back and get jobs or security in their jobs and having their savings back. People's savings are gone. But I believe we could be in a much better shape in June next year."

He said the increasing cases in the US and Europe is worrisome, but "I am a little optimistic that they are mild cases... I would like to see what happens in winter".

While speaking during the panel discussion, Armida Alisjahbana, under-secretary-general at the UN, said a partial recovery is likely next year but more reasonably in 2022 and beyond.

In order to support recovery, she called for opening borders, transport connectivity, upscaling the skills of the youth and equip them with digital skills and strict health protocols that will facilitate trade help the trade flow.

Mohammad Abdullah Abunayyan, chairman of Acwa Power, said businesses have to be flexible and dynamics to be able to manage and act in a quicker manner to adapt to new realities.