Agthia’s 2015 profit up 20% as consumer sales boom
Revenue for the year reached $507.6m,(€455m) up almost 13% from 2014. According to Agthia’s preliminary earnings statement, its consumer business division, which makes up around 40% of the company, was the main driver of this growth, up 23% year-on-year, while its larger agribusiness division saw an increase in revenue of just 7%.
Costs down, margins up
“The company's net profit… advanced at a faster rate than the sales growth; an increase of 20% year-on-year; excluding the impact of our latest acquisition, net profit grew by 18%. Net profit growth outpaced sales growth attributable to higher sales and improved gross profit margin resulting from improved sales mix, competitive procurement, cost saving initiatives and stable pricing in Northern Emirates,” said Agthia’s preliminary statement.
The “latest acquisition” referenced in the statement is Al Bayan water, which Agthia bought along with two other smaller producers in October last year, strengthening its hand in the UAE’s bottled water market.
Beyond organic growth in the UAE, Agthia is planning to enter Saudi Arabia in its quest to nearly double its revenues to $1bn (€896m) within just a few years. Fasahat Beg, executive vice president of Agthia’s consumer division, told UAE daily paper The National, the company was actively eyeing acquisitions in Saudi Arabia, but would also consider joint ventures or distribution deals.
Late last year Agthia announced its intention to enter Saudi Arabia’s loosening flour market, as a way to make use of spare milling capacity in its current facilities.
Major investments planned for 2016
According to Beg, Agthia will also invest $136m (€122m) in new factories and warehousing facilities across the UAE over the next three years. The firm’s chief executive, Iqbal Hamzah, told Reuters around half this sum would be spent in 2016, and said Agthia had around $136m (€122m) in surplus cash on top of the amount to be invested this year.
Last month Agthia’s Al Ain Water subsidiary announced it was investing more than $17m (€15.2m) to expand its production lines by 45%, which it expects to complete before the end of the current quarter. The brand also introduced its new “Essentials for Life” marketing platform, aimed at encouraging its customers to lead healthy and active lifestyles in a similar vein to its previous marketing campaigns.
Agthia is also strengthening its visibility across all its sub-brands, by adding the Agthia logo to its branded products, including Al Ain Water, Yoplait yoghurts and Capri Sun drinks.
