The Abu Dhabi-listed Agthia food and beverage company plans to expand its distribution network in Dubai and Sharjah after posting a 22 per cent increase in net profit last year.
Net profit at the firm came in at Dh193.3 million compared to Dh158.7m a year ago, while sales grew 9 per cent to Dh1.66 billion.
“This year, we want to consolidate the businesses, launch new frozen baked goods, and expand the distribution for all products such as flour, animal feed and consumer goods, in Dubai and Sharjah,” said Iqbal Hamzah, the chief executive of Agthia. “We are also looking at acquisitions. It is too early to say, but our focus is on consumer [business].” But its fourth quarter net income of Dh42.2m was 11 per cent below Shuaa Capital estimates. The Bloomberg consensus forecast was Dh50m.
The increase in annual profit was attributed to sourcing of grain at competitive prices from global markets such as Australia, Canada and the United States, cost-saving initiatives that cut the weight of plastic bottle packaging by 15 per cent, an increase in capacity for in-house production of previously outsourced animal feed and stable flour pricing in the Northern Emirates.
Wheat futures had dipped to a four-year low in the middle of last year.
The dip in oil prices and slowdown in demand from a slowing economy in China is not expected to have any effect on flour prices in the UAE, according to Mr Hamzah.
“Grain prices are stable now since the middle of last year. So far there has been no change in consumer prices but we expect [consumer] prices going down this year,” he said.
Agthia, which now outsources less than 10 per cent of its animal feed production, is hoping to increase production by 12 per cent next month.
It expects to enter Saudi Arabia in the second half of the year with flour and tomato paste products, and launch new Yoplait dairy products and Capri Sun juices in the UAE.
Agthia also plans to double its water bottling line in Turkey in May, and introduce a new bottling line for its Al Ain brand of water in the second half of next year.
Last year’s highlights for Agthia included the Al Wathba distribution centre, which became fully operational in July.
The company’s agribusiness division, which manufactures and distributes Grand Mills flour and Agrivita animal feed products, recorded a net profit of Dh201m last year, an increase of 17 per cent over the previous year. Sales rose 8 per cent to Dh1.04bn as government initiatives to promote food security encouraged domestic food production.
The consumer business division, which produces and distributes Al Ain water, Alpin Natural Spring Water, Yoplait and Capri Sun, recorded a net profit of Dh57.3m, a 10 per cent increase.
Sales jumped 12 per cent to Dh616.6m on the back of a new high-speed bottling line.
Agthia shares yesterday gained 2.5 per cent to Dh6.15.
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