Agthia shows 21% profit growth despite food division loss in H1
Overall sales were up 8% to US$224m, with Agthia’s core agribusiness division bringing in US$145m of the revenue, around 65% of the total.
“The Group is focusing on growing its core businesses and improving performance of newly launched products. We continue to look for opportunities to keep up the growth momentum, not only in the UAE, but in other markets as well,” said Agthia chairman Dhafer Ayed Husain Al Ahbabi.
Agribusiness remains dominant
The agribusiness section made US$30.9m in profit, which Agthia attributed to improved sourcing of grains, benefits from bringing some animal feed production in-house, stable flour prices in the northern emirates, and a “favourable product mix”. Agthia said it is in the process of expanding its poultry feed operation, and plans to complete the capacity increases by the fourth quarter of the year.
Earlier this year Agthia rebranded its animal feed division as Agrivita, moving away from the Grand Mills name the business had operated under since 1978. The company retained the Grand Mills brand for its consumer flour products, which are also part of the agribusiness division.
Agthia’s consumer business division brought in US$79m in revenue for the period, up 7% year-on-year. The section is dominated by the company’s water and beverage operations, which include Al Ain mineral water, Yoplait dairy products and Capri-Sun drinks, bringing in US$63.4m in sales.
The first half saw Agthia open a new high-speed bottling plant and distribution centre. The company also launched new Monster energy drink beverages in June in some UAE outlets, with what it described as encouraging results.
Late baked goods drive loss
The consumer division’s smaller food unit struggled to perform, despite a 15% growth in revenue to US$15.6m. The division lost US$3.9m in the first six months of the year, which Agthia said was the result of depressed dairy margins, and up-front investment costs in its new frozen baked goods division.
The company also revealed the commercial launch of its frozen baked goods has been pushed back to the third quarter, blaming “external regulatory factors”.
Despite the food business’s loss, Agthia’s acting-CEO and CFO Iqbal Hamzah remained upbeat, and said both the agribusiness and consumer divisions had performed well, and reflected the company’s strategy of sustainable growth.
“The group's balance sheet is very strong, and we will continue seizing the right business expansion opportunities and enhancing our manufacturing capabilities. We expect 2014 to be another growth year for Agthia,” said Hamzah.
Outside of the GCC, Agthia said its Turkish water brand Alpin, launched last year, was growing steadily, with plans to increase capacity next year and expand distribution to the GCC. The company said its Egyptian operations were performing “in line with expectation”, and past restructuring activities were showing results.