Animal feed boost for Agthia as profit jumps 32%

But profit in the consumer business division dropped 19 per cent to Dh7.6m due to a slump in demand for Capri-Sun juices and higher costs.

AL AIN, UNITED ARAB EMIRATES - - - February 24, 2014 --- A tour of the Al Ain Water Factory, which is one of several companies owned by the parent company Agthia. The plant produces not only water bShow more

Agthia Group, the Abu Dhabi food and drinks company, said it expects strong annual growth after profit jumped by a third in the first quarter of the year on increased sales at its animal feed division.

Net profit increased 32 per cent to Dh49 million in the first three months of the year compared with a year earlier. Sales rose by 8 per cent to Dh390.1m.

“We started the year quite well,” said Iqbal Hamzah, Agthia’s chief financial officer. “The company has posted strong sales and profits growth. That is a result of competitive sourcing of grains, a favourable product mix and production efficiencies.”

Profit at the Agri Business Division, which manufactures and distributes Grand Mills flour and Agrivita and animal feed products, rose 35 per cent to Dh58.8m as sales rose 11 per cent to Dh259.7m.

Profit in the consumer business division, which produces and distributes products including Al Ain water and Yoplait dairy products, dropped 19 per cent to Dh7.6m because of a slump in demand for Capri-Sun beverages, capacity constraints at its water plant and higher costs. Sales rose 3 per cent to Dh130.5m.

Mr Hamzah expects stronger sales and profit growth from the third quarter after production starts at a new high-speed bottling plant next month and the introduction of new products.

These include frozen baked products, also in May, and Monster Energy drinks in June. The new water facilities will increase capacity by 60 per cent to 52 million cases of bottled water a year from 32 million cases today.

The company will also relaunch Capri-Sun with a higher juice content. Capri-Sun sales have recently fallen on concern over the drink’s high sugar content and its effect on the health of children, according to Mr Hamzah. Regulations requiring a higher juice content than that in Capri-Sun drinks has also prevented the drink being available in government schools.

“In coordination with brand owner Wild in Germany, we will have a new product with a high juice content and we expect volume to pick up in the second half of the year,” he said. Overall, “this year will be another successful growth year for us”.

Agthia shares rose nearly 2 per cent yesterday to Dh5.20 each.

“The underlying results were very positive,” said Asjad Yahya, the senior vice president of research at Shuaa Capital in Dubai, who has a “buy” rating on the stock. “ It beat our numbers and the consensus. The margins are a lot stronger than we were expecting.”

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