Abu Dhabi’s Agthia plans to expand its bottled water business in Egypt as the food company looks to boost overseas sales
It expects to post a 22 per cent increase in profit for the whole year and a 9 to 10 per cent rise in revenue, said Iqbal Hamzah, the company’s chief executive, on the sidelines of food exhibition SIAL Middle East in the capital.
It aims to start exporting bottled water under the Al Ain brand to the country in the second half of next year.
The company may also look at establishing a bottling plant at a later date. It already has a factory there manufacturing pastes and purees.
Agthia aims to increase production capacity by March at its animal feed factory in Abu Dhabi by 15 per cent from 600,000 tones a year.
It also wants to raise the capacity of its bottling plants in Turkey by 3.5 million cartons a year by April.
Mr Hamzah also said the company was interested in acquiring a “mid-sized” water or dairy business in the region, without elaborating further.
The Abu Dhabi-listed company also expects to expand its portfolio, including two premium yogurt products and more Capri Sun products and water-based products.
The growth drivers for next year would be expansion in existing markets such as the UAE and Egypt, and new markets such as Saudi Arabia.
“It has a huge population of 90 million, the country is stabilising and we are looking at expanding our distribution in the retail segment,” Mr Hamzah said.
It also expects to enter Saudi Arabia with products that include yogurt, flour, the Turkish bottled water brand Alpin and tomato paste.
Flour prices in the Northern Emirates and Dubai are expected to drop in the next two months as global wheat prices continue to fall, said Mr Hamzah.
The price of flour is fixed in Abu Dhabi, and Agthia gets subsidies from the government for selling below the market rate. The subsidy rates have stayed constant since August 2007 when the government stepped in with subsidies to control inflation.
Wheat prices shot up by 136 per cent between 2006 and 2008 globally due to increasing oil prices, export restrictions by some countries and sustained demand, among other reasons.
“If sale prices drop in the Northern Emirates, the absolute subsidy drops, but it doesn’t impact the overall profitability of the company because the input costs are also lower,” Mr Hamzah said.
“The global prices of grain are high but not yet at the levels of 2006 or 2007; we haven’t heard from the government on the move [to cut subsidies].”
Shares in Agthia gained 25 fils or 3.7 per cent yesterday to close at Dh7 each. They are up 58.3 per cent for the year to date.
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