Agthia Group has reported higher first-half sales from its food business but the UAE food and drinks manufacturer said the unit ran up a loss amid lower dairy margins and costs from investment projects.

The company said its food segment filed net sales of AED57.2m for the period to the end of June, an increase of 15%.

However, the unit recorded a loss of AED14.2m, with Agthia pointing to "depressed" dairy gross margins, higher marketing investment and the pre-operating costs related to the frozen baked category.

It said the commercial launch for the frozen baked products is now scheduled for the third quarter. Agthia said the delay was due to "external regulatory factors".

Agthia's consumer division, which houses the food business, saw net sales of AED290.2m in the first six months of the year, an increase of 7% on the same period in the previous year.

Company-wide, Agthia booked net profit of AED104.5m for the first half of 2014, an increase of 21%, driven by higher sales and an improvement in profit margin. Net sales grew 8%, reaching AED822.6m.

Iqbal Hamzah, Agthia's acting CEO and CFO 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."