Agthia targets takeovers backed by Dh200m budget

Company wants to grow both in the UAE and in the Arabian Gulf region through acquisitions in the water, juice and dairy segments.

Agthia built a high-speed bottling line for Al Ain water last year, expanding capacity by 60 per cent. Delores Johnson / The National

Abu Dhabi-based Agthia is in early talks with potential take-over targets as it seeks to deploy a Dh200 million war chest.

The company wants to grow in the UAE and the Arabian Gulf through acquisitions in the water, juice and dairy segments.

Agthia reported an increase in net profit of 22 per cent to touch Dh59.2 million for the first quarter as sales grew 11 per cent to Dh434.9m year-on-year.

“Cost reduction, diversification and launch of new products, expansion of the distribution reach and strengthening of the underperforming businesses besides mergers and acquisitions will be our growth strategy this year,” said Iqbal Hamzah, the chief executive at Agthia.

Cost reductions will come through increasing efficiencies, the company said. New products would include yoghurt drinks. It expects to expand its retail presence in groceries and hotels and restaurants in the Northern Emirates, Dubai and Sharjah. Agthia also plans to add 200 positions during the year.

Egypt now houses its entire tomato paste line. Agthia plans to move its sourcing and packaging of frozen vegetables to the country at a cost of about Dh5 million. It currently sources the vegetables from Europe and packages them in the UAE.

“The business environment in Egypt is improving and consumer spending is rising. We expect good growth this year, higher than last year,” Mr Hamzah said. “We do not see it as a risky investment as the UAE always had good relations with Egypt and there is a lot of support from the UAE.”

During the quarter, Agthia’s deal with Monty’s Bakehouse UK will help to expand its presence in the manufacturing of products for global airlines in the third quarter.

The agri-business division reported a 12 per cent higher net profit of Dh65.9m on the back of greater demand for the animal feed Agrivita.

The division also manufactures and distributes Grand Mills flour, which added customers in the Northern Emirates as it expanded its retail offering. The company is increasing its poultry feed production capacity that is expected to be operational next month, increasing the current capacity by 13 per cent. It is also installing a new packaging line to ramp up its retail presence and is expected to start production next year.

The consumer business division recorded a net profit of Dh10m for the quarter, a 32 per cent increase year-on-year, as net sales reached Dh158.9m, a growth of 22 per cent during the same period.

Agthia built a high-speed bottling line for Al Ain water last year, expanding capacity by 60 per cent.

It will add a second high-speed bottling line, which will be ready next year, increasing the existing capacity by a further 40 per cent.

Follow The National's Business section on Twitter