Eng Dhafer Ayed Husain Al Ahbabi
Agthia profit surges 21pc in H1
Dubai, July 24, 2014
Agthia Group, one of the UAE’s leading food and beverage groups, has reported a net profit of Dh104.5 million (28.45 million) for the first half of 2014, an increase of 21 percent year-on-year driven primarily by higher sales and an overall improvement in profit margin. Net sales increased by 8 percent for the first six months of 2014, reaching Dh822.6 million.
Eng Dhafer Ayed Husain Al Ahbabi, chairman of Agthia Group, said: “The group is focusing on growing its core businesses and improving performance of newly launched products. We continue to look for opportunities to keep up the growth momentum, not only in the UAE, but in other markets as well.”
Iqbal Hamzah, acting chief executive officer and chief financial officer of Agthia, added: “Both the Agri and Consumer Business Divisions performed well during the first half of the year, which reflects our successful and sustainable strategy in growing our business profitably. The group’s balance sheet is very strong, and we will continue seizing the right business expansion opportunities and enhancing our manufacturing capabilities. We expect 2014 to be another growth year for Agthia.”
The Agri Business Division, which manufactures and distributes Grand Mills flour and Agrivita animal feed products, recorded net sales of Dh532.4 million in the first half of 2014, up 8 percent on the same period the previous year. Net profit was Dh113.4 million, an increase of 21 percent year-on-year, resulting from higher volumes and improved margins. The improvement in gross profit margin was the result of competitive sourcing of grains, ongoing cost saving initiatives, favourable product mix, in house production of previously outsourced animal feed and stable flour pricing in the Northern Emirates. The expansion of poultry feed production capacity is underway with completion planned for quarter four of this year.
The Consumer Business Division, which produces and distributes products including Al Ain Mineral Water, Yoplait fresh dairy products and Capri-Sun juices, saw net sales of Dh290.2 million in the first six months of the year, an increase of 7 percent on the same period in the previous year. Second-quarter net sales of Dh159.8 million and profit of Dh14.6 million reflect a strong 11 and 19 percent year-on-year growth respectively.
The Water and Beverage segment recorded net sales of Dh233 million, up 5 percent from the first half of 2013, with net profit increasing 7 percent to Dh36.4 million. The Food segment’s net sales reached Dh57.2 million, an increase of 15 percent, and recorded a loss of Dh14.2 million mainly resulting from depressed dairy gross margin, higher marketing investment behind the segment and the pre-operating costs related to the frozen baked category.
Meanwhile, in the Consumer Business Division, expansion projects remain on track, with the commissioning in June of the new high-speed bottling line and the new modern mega distribution centre. However, the commercial launch for the frozen baked products is now scheduled for the third quarter. The delay in launch is attributed to some external regulatory factors. The trial production of selected products has already commenced.
The group also launched Monster beverage products in selective UAE outlets in June with encouraging initial results. Further distribution expansion is planned during the rest of the year.
In Turkey, Alpin natural spring bottled water which was launched last year continues to gain distribution and consumer offtake in domestic market and further distribution expansion is underway. Following strong demand, the Company plans to expand its Alpin production capacity in Turkey next year. Plans are also in place to expand distribution in the UAE during the second half of the year and later in other GCC countries.
In Egypt, performance is in line with expectation, both in terms of sales and profitability. The previously reported operations restructuring designed to improve organizational efficiency are continuing to bear results. -TradeArabia News Service