Agthia Group, a food and beverage company based in Abu Dhabi, reported a 10 per cent like-for-like rise in its first quarter net income, helped by cost optimisation efforts across most segments of the company’s consumer goods business.
The company, which is majority owned by Abu Dhabi Government-controlled conglomerate Senaat, said net profit for the three months to the end of March, climbed to Dh47 million, excluding a one-time extraordinary income related to Ice Crystal factory that was booked during the same period in 2017. The first quarter like-for-like revenues climbed to Dh491m, up 3.7 per cent from a year earlier, Agthia said in a statement to Abu Dhabi Securities Exchange, where its shares are traded.
The net income for the latest quarter was slightly under the Dh47.13m estimate of Bahrain’s Sico and Egyptian investment bank EFG Hermes’ Dh47.84m prediction.
Agthia, which had posted a 19 per cent year-on-year drop in its full-year 2017 net profit, has struggled to maintain profit growth in recent quarters. The firm attributed the fall in yearly income to lower contributions from its flour and animal feed business after the UAE reformed subsidies for both sectors. The introduction of VAT this year added to pressure on its consumer business lines, which the company said it has managed to offset with a tighter control on costs.
“Despite a challenging operating environment that saw the introduction of VAT and other headwinds, Agthia continued to grow in line with our 2020 strategy,” said Dhafer Al Ahbabi, the chairman of Agthia. “We began 2018 with major steps that speak to our dedication as innovators in all of our industries, and we intend to continue to grow.”
The group’s water business continued its growth momentum, while the beverages category, comprising of Capri Sun juice and Al Ain fresh juices, witnessed softening demand due to changing consumer preferences on the back of the VAT levy and a generally declining juice market, the company said.
Earlier this year, Agthia also signed an agreement with the Department of Urban Planning and Municipalities to manage Abu Dhabi’s and Al Ain’s food service centres, supplying UAE citizens with a range of consumer products at discounted prices, which will help reinforce its growth in consumer goods.
Agthia’s consumer categories now represent 53 per cent of total group revenues, compared to less than 20 per cent only a decade ago. Its net revenues from the food category recorded a year-on-year rise of 16.8 per cent in the first three months of 2017, it noted.
The company plans to invest more than Dh500m by 2020 in acquiring assets in Saudi Arabia, the region's biggest economy, as it looks to expand its regional footprint and add new revenue lines, its chief executive Tariq Al Wahedi told The National in February.
The company is evaluating “many” acquisition targets and aims to increase its revenue from Saudi operations “many-fold” in coming years, he said at the time.