Pepsi fizz for Dubai Refreshments

Dubai Refreshments, the bottler of Pepsi in Dubai and the Northern Emirates, increased profits 42 per cent to Dh52.7m in the second quarter on revenues up 14 per cent to Dh293m.

Dubai Refreshments, the bottler of Pepsi in Dubai and the Northern Emirates, increased profits in the second quarter to Dh52.7 million from Dh37m in the same quarter last year. Antonie Robertson / TheShow more

Sweet-toothed tourists in hotels and restaurants helped Pepsi sales to maintain their fizz in the second quarter from a year earlier as profits for the region jumped 42 per cent.

Dubai Refreshments, the bottler of Pepsi in Dubai and the Northern Emirates, increased profits in the second quarter to Dh52.7 million (US$14.3m) from Dh37m in the same quarter last year, on revenues up 14 per cent to Dh293m.

Tarek El Sakka, the general manager for the company, said sales had been strong across supermarkets but hotels and tourism establishments in the UAE had been big buyers in the first half of the year.

"The bulk of our business is still the local business and there is growth in sales," he said.

"You have some segments doing better than others. Hotels and tourist areas have better results than the rest of the market but, in general, growth is pretty much across the board."

Sales for the first half rose 14 per cent to Dh509m and profits were up 44 per cent to Dh88.6m.

Mr El Sakka said Dubai Refreshments had also increased its exports to countries around the Middle East and Africa, which had buoyed sales.

The company increases capacity at its factory in Dubai during the peak consumption months of winter and then exports any extra stock abroad.

"We now have over 30 countries that we export to and we are expanding the territories," Mr El Sakka said.

He put the sharp rise in profits in the first half down to the increase in sales as well as a price increase introduced in January last year. Along with its major competitor, Coca-Cola, Dubai Refreshments increased the price of a standard can of Pepsi from Dh1 to Dh1.50 last year.

The price rise was not immediately implemented in the first half of last year and so this year's results compare favourably with the early part of 2011.

"There's growth in sales but we were in a period where the pricing was low last year," he said.

Mr El Takka said Dubai Refreshments would open a new Dh500m bottling facility in Dubai Investments Park next year that would cater to the needs of the company for the next 50 years.

"This will be the major production operation we have. It's a large operation and significantly bigger than the operation we have today," he said. "It will allow us to expand immediately and we can significantly add capacity without having to change location again."

This year, Dubai Refreshments and its competitor, Al Ahlia Gulf Line, the Coca-Cola distributor in the UAE, were both involved in a confusing spat with the Government. They were called in for talks with the Ministry of Economy in February accused of misleading consumers by selling smaller-sized cans in retail stores.

Confusion reigned for a week about whether the bottlers had done anything wrong and one major store, LuLu Hypermarket, cleared cans from its shelves because it thought it might be breaking the law. The issue was eventually resolved with no repercussions for either bottler.

Dubai Refreshments is listed on the Dubai Financial Market and its shares were flat following its earnings release yesterday.