UAE: Agthia Q1 profit up despite consumer weakness
- Q1 net profit up 32% to AED49m (US$13.34m)
- Sales climb 8% to AED390.1m
- Food falls to loss on higher costs
Agthia food profits under pressure
UAE-based food and beverage firm Agthia Group has booked a rise in first-quarter earnings, despite a decline in profitability at its consumer business.
Agthia said net profit rose by almost one-third in the three months to the end of March. Gains were driven by "higher net sales and an overall improvement in margins", the company said. Sales increased 8% in the period.
However, profitability at the firm's consumer business - which consists of food and bottled water - was down 19%. Food sales rose 11% but the unit saw a loss of AED7.1m due to higher marketing and distribution costs in dairy.
Agthia's business includes the local distribution of yoghurt brand Yoplait.
Agthia Group net sales increase by 8 percent and net profit rises 32 percent in the first quarter of 2014
ABU DHABI, April 29 2014: Agthia Group PJSC, one of the UAE’s leading food and beverage groups, has reported net sales increase by 8 percent year-on-year to AED 390.1 million. Net profit increased 32 percent to AED 49 million in the first quarter of 2014 from the same period in 2013. These results were driven primarily by higher net sales and an overall improvement in margins.
H.E. Rashed Mubarak Al Hajeri, Chairman of Agthia Group commented: “The year has started off well, with firm sales and profit gains which position Agthia for another strong year. We will continue to maximize the UAE’s growth potential while also exploring growth opportunities in new geographies and introducing new products.”
The Agri Business Division, which manufactures and distributes Grand Mills flour and Agrivita and animal feed products, recorded net sales of AED 259.7 million in the first three months of 2014, up 11 percent on the same period the previous year. Net profit was AED 58.8 million, an increase of 35 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 and stable flour pricing in the Northern Emirates.
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 AED 130.5 million in the first quarter, an increase of 3 percent on the same period in the previous year. However, the net profit for the Division decreased by 19 percent to AED 7.6 million due to temporary marginal sales growth in bottled water owing to capacity constraints, an unfavourable channel mix of bottled water sales, a decline in Capri Sun volumes, and higher overhead costs. Performance is expected to improve following the commissioning of new high speed bottling line in Q2 and the introduction of a new Capri Sun product mix later in the year.
Ilias Assimakopoulos, Chief Executive Officer of Agthia, added: “The Company’s sales and profit performance are the reflection of the progress made on our strategy of expanding and diversifying our product portfolio, driving growth of our core product categories and proactively addressing underperforming businesses. Our balance sheet is strong and can support our expansion plans, and we expect 2014 to be another growth year for Agthia.”
During the period, the Agri Business Division completed its flour production capacity expansion and, in February 2014, the Company rebranded its animal feed portfolio under the Agrivita brand.
Meanwhile in the Consumer Business Division, expansion projects remain on track, with the launch of frozen baked products and the commissioning of a new high-speed water bottling line scheduled for the second quarter of 2014.
The Company will also be launching Monster Energy beverage products and expanding its distribution of Alpin, the natural spring water from Turkey. In Turkey, domestic sales volume and distribution of Alpin natural spring bottled water are growing steadily. In Egypt, the previously reported operations restructuring designed to improve organizational efficiency and performance are continuing to bear results, with performance yielding improvement, in line with expectations. -
About Agthia Agthia Group is a leading Abu Dhabi based food and beverage company established in 2004. The Company is listed on the Abu Dhabi Securities Exchange (ADX) and has the symbol “Agthia”.
51 percent of the Company’s shares are held by Senaat (General Holding Corporation), an Abu Dhabi Government entity, with the balance held by individual and institutional investors. The Company’s assets are located in the UAE, Egypt and Turkey.
Agthia offers a world class portfolio of integrated businesses providing high quality and trusted food and beverage products for customers and consumers across the UAE, GCC, Turkey and the wider Middle East.
Agthia employs around 2,000 employees and has two business divisions in various food and beverage segments:
• Agri Business Division: UAE - manufacturing, distribution and marketing of Grand Mills, the leading high quality flour and Agrivita leading animal feed products;
• Consumer Business Division: UAE - manufacturing, distribution and marketing of several brands including Al Ain Water, a leading bottled drinking water; Capri-Sun juices; Yoplait fresh dairy products. Egypt - Al Ain Pure Natural tomato and chilli paste, and fruit puree. Turkey - Alpin, natural spring bottled water.
Original source: Agthia Group
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