Agthia, the food and beverage maker, warned of a tough year ahead as it reported a 4 per cent rise in fourth-quarter profit.
Profit rose to Dh54.3 million, compared with Dh52.3m a year earlier, while sales gained 9.2 per cent to Dh509m.
Net profit for last year touched Dh254.3m, compared to Dh231m in 2015, up 10 per cent, as net revenues grew 7.4 per cent year-on-year to Dh2.01 billion.
A slowdown in consumer consumption and a change in Abu Dhabi’s subsidy regime given to flour and animal feed businesses hit revenues during the second half of the year.
Water and electricity tariffs have risen by 23 per cent and 34 per cent respectively from January 1 in the emirate.
“While it is clear that the environment in 2017 will remain tough as we confront external cost challenges, our core business fundamentals are robust,” said Dhafer Ayed Al Ahbabi, the chairman of Agthia. “We will continue to focus on regional expansion and investment opportunities to grow sales [and] increase market share.”
Last year revenues from Agthia’s two other largest business segments, flour and animal feed, were flat.
To shore up its volume and profits, the Abu Dhabi-listed company introduced competitively priced products in flour and animal feed during the third quarter and expanded its distribution network in the Northern Emirates and export markets, according to Agthia.
“The results were better than expected,” said Sanyalaksna Manibhandu, the head of research at NBAD Securities. “Some food segments are more discretionary, such as yogurt and drinks, than others, such as grains and water, and some people might think they don’t need [the discretionary items] during tough times.”
Saudi companies such as Almarai were hit by a rise in utility tariffs in Saudi Arabia last year.
Agthia has been expanding its water business over the past two years. The segment, which includes the Al Ain and Al Bayan water brands, “continues to be a key driver of growth”, according to Tariq Al Wahedi, the acting chief executive of Agthia.
Agthia bought Dubai-based Al Bayan water company in 2015. Last year, it signed a joint venture with Kuwait’s Al Wafir Marketing Services Company to set up a water bottling plant in Kuwait to produce Al Ain Water. It also acquired the water business of Jeddah-based Delta Marketing Company, which produces the Al Ain brand water last year, but the company declined to reveal the value.
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