Al Ain water keeps Agthia profit flowing in first half

Agthia, whose products range from Al Ain bottled water to Agrivita animal feed, reported a 20 per cent increase in first-half profit.

The company credited higher sales and production from its bottled water segment.

And lower diesel prices could mean higher profit ahead for the country’s biggest agribusiness operator.

Operating profit for the first half of this yearreached Dh125 million, up from Dh103m a year ago. Net sales grew 11 per cent to Dh911m, compared to the year-earlier Dh822.6m.

“With the fall in diesel prices, we expect the distribution costs to go down,” said the company’s chief executive, Iqbal Hamzah. “It is not going to impact the retail prices but would reduce our operating costs for the second half of the year.”

The Abu Dhabi-listed company expects its Egypt business to improve as it resumes direct sales to the consumers this quarter in Cairo and the Delta region, after stopping last year due to distribution issues. It plans to introduce Al Ain water to Egypt in the next quarter.

At the end of the first six months it had cash of Dh652 million. It expects to grow in the UAE and across the Arabian Gulf countries through acquisitions in the water, juice and dairy segments, and has identified the targets, Mr Hamzah said.

It would also deploy more than Dh200 million in various capital expenditures, including adding 50,000 tonnes to its Abu Dhabi grain silos by 2017, he said.

The current silo can hold 150,000 tonnes and stores wheat, barley and corn.

The other capital expenditures would include adding a second high-speed bottling line in its Al Ain factory that would increase its production capacity next year by 40 per cent from 52 million cartons a year, a new bottling line in its Turkey bottling plant that would double the capacity from 3.5 million cartons a year, and expansion of its warehouse space and distribution network in Al Ain, Abu Dhabi and Dubai.

Agthia shares rose 1.9 per cent to Dh7.71 apiece. They have gained 24.3 per cent for the year to date, the seventh-best performance among Abu Dhabi-listed stocks.

The company’s net sales in the water business, which besides the Al Ain brand also includes Alpin spring water, reached Dh297 million, a rise of 25 per cent as it added capacity in its Al Ain factory. The added production was absorbed mostly in the UAE. In April it increased prices for the bottled water by 15 per cent for the retail customers.

The increase in profitability in the UAE business by 61 per cent to Dh45 million was offset by 14 per cent devaluation in Turkish lira.

The consumer business, which produces and distributes Yoplait dairy products and Capri Sun juices apart from bottled water, reported net sales of Dh351 million, a 21 per cent growth year-on-year. Net profit jumped 60 per cent to Dh35 million.

Agthia’s agribusiness division, which manufactures and distributes Grand Mills flour and Agrivita animal feed, reported a 5 per cent increase in net sales to Dh560 million, while net profit rose 12 per cent year-on-year to Dh127 million.

It added new customers such as groceries and supermarkets in the Northern Emirates for Grand Mills flour and raised exports sales. Together these increased net sales by 9 per cent and a 13 per cent increase in net profit. A new retail flour packaging line would come on stream in the second quarter of next year.

Agrivita’s net sales remained flat because of delays in government tenders, but favorable commodity prices and more production capacity increased met profit by 11 per cent.

During the first half, the Egyptian-based business was weak because of the cancellation of orders in Libya from political unrest. Agthia expects to recoup the orders by the end of the year.

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