Agthia reports 2% rise in annual profits despite increasing competition

The producer of Al Ain water saw 'outstanding growth' in its food business

Agthia reported a drop in its first-half net profit on Tuesday.​​ Delores Johnson / The National

Agthia, the Abu Dhabi food and beverage company that produces Al Ain water, said annual profit increased 2 per cent in 2018 from the previous year, beating analysts’ estimates, despite increasing competition.

Net profit grew to Dh210.5 million in the period to December 31, the company said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded. Agthia, which is majority owned by Abu Dhabi Government-controlled conglomerate Senaat, beat the highest estimate of analysts polled by Bloomberg.

The company "displayed strong performance across major metrics throughout our product portfolio in a year which was earmarked by aggressive competitive activity against the backdrop of declining consumer spend and changing purchasing habits, both at home and in international markets,” chief executive Tariq Al Wahedi said. "We will continue working towards increasing our market share across different categories, and strengthening our regional footprint through geographic expansion."

Revenue for the year fell slightly to about Dh2 billion from about Dh2.05bn.

The company’s flagship Al Ain water brand had 5 per cent growth in volume “despite aggressive pricing promotions in the market,” the company said. The food business of Agthia recorded a 16 per cent growth with strong performance in Egypt and trading items. Revenues in Egypt increased by 25 per cent on account of continuous retail expansion and higher exports

The company’s total assets grew marginally to Dh2.97bn from the previous year.

In October, the company said it plans to expand into new markets despite increasing competition and marginal growth.

"We are adapting to this with innovation and value-added products and this is how we maintain our profitability, and that is how we grow," Mr Al Wahedi told The National in October.

Countries in the six-member GCC are growing but not at the same pace of the pre-oil price crash that began in mid-2014, when prices were around $115 per barrel. Governments in the region are undertaking reforms to stimulate the economy and help attract foreign direct investment, measures that are expected to trickle down to the people and boost purchasing power.

Agthia is the biggest player in the UAE with a market share of 30 per cent in the food and beverage industry and it plans to move up the list in Saudi Arabia, where it is eighth with a 2 per cent market share. The company can spend as much as Dh2bn on acquisitions funded through a mixture of equity and debt by raising money through banks, according to Mr Al Wahedi.