Agthia Group reports 2012 financial year results

Agthia Group, one of UAE’s leading food and beverage groups, today released the Company’s audited financial results for the financial year 2012. The Company achieved a robust performance as reflected by the strong sales and profit growth. Net sales for 2012 grew by 16% to reach AED 1.33 billion, while net profits reached AED 125 million, representing a 44.5% growth year on year. As a result of the Company’s strong performance, cash dividend of 5% has been recommended by the Board of Directors. Agthia’s Agri Business Division, that manages, manufactures, distributes and markets Grand Mills, the leading high-quality flour and animal feed products in the UAE, recorded net sales of AED 853.5 million for the year, reflecting a strong growth of 11 percent compared to same period last year, mainly driven by volume growth. The Company’s Consumer Business Division, that manages, manufactures, distributes and markets several well-known consumer brands including Al Ain Mineral Water, a leading bottled drinking water in the UAE; Capri-Sun juices; Al Ain tomato paste and frozen vegetables products; Chiquita juices; and Yoplait dairy products, achieved a net sale of AED 473 million – a solid 26% growth year on year.

Beyond organic core business growth, consolidation of the recently introduced products- Yoplait fresh dairy products & Chiquita natural juices – has also been a strategic focus for the Company during the year along with building strong in-store presence and visibility by driving distribution and penetration across all the retail segments. Volumes have been growing progressively, and further market mix improvements and other initiatives are being implemented to accelerate this volume growth.

In Turkey, rebranding of the recently acquired spring water company has been finalized and is ready for launch in Q1 2013, under the new brand “Alpin”. Plans are underway to expand regional distribution in Turkey and launch “Alpin” natural spring drinking water in the UAE during the second half of 2013.

The new initiative of frozen baked product launch is on track for launch in the last quarter of 2013, while various production capacity expansion projects have been undertaken to meet mid-term demand including: poultry feed production capacity expansion to be completed by April 2013; flour milling capacity increase by Q1, 2014; new high speed bottling line commissioning in Q2, 2014; and five & ten liters new bottling lines in Turkey set for completion in Q2, 2013.

Commenting on the results, His Excellency Rashed Mubarak Al Hajeri, Chairman of Agthia Group said, “We are very pleased with our strong overall performance in 2012 and are pleased to be recommending 5% cash dividend to our shareholders who have placed their confidence on us. We are optimistic going into 2013, despite the regional economic challenges and continued volatility in the commodity market; we expect another year of good business performance and growth.”

Ilias Assimakopoulos, Chief Executive Officer of Agthia, added, “In 2012 we have successfully sustained core business growth performance and have put in place a clear strategy focused on:  improving the performance of recently launched products and that of the Egyptian operation, geographical expansion, incremental brand building investments, enhancing manufacturing capabilities, as well as further operating & cost efficiency improvements. Furthermore, Agthia has maintained a healthy balance sheet and is thus well positioned for another year of business growth in 2013.” 

Sales

Net Sales at AED 1.33 billion reflects a strong growth of 16 percent versus last year mainly driven by solid 26 percent sales growth achieved by the Consumer Business Division and a healthy 11 percent growth delivered by the Agri Business Division. 

Net Profit

Net profit of AED 125 million grew by 44.5 percent versus same period last year. Strong profit growth was largely driven by 4.5 percentage point improvement in gross profit margin resulting mainly from competitive procurement of grains, cost saving initiatives, production capacity increases of flour and feed mills displacing outsourcing and price increases. 

Agri Business Division (ABD)

Agri Business Division net sales of AED 853.5 million for the year reflects a strong growth of 11 percent compared to same period last year mainly driven by volume growth.

Net profit at AED 132 million surged 51 percent compared to same period last year contributed by 600 basis points improvement in gross profit margin. The margin improvement mainly resulted from cost savings initiatives, in house production of previously outsourced volume of flour and feed and competitive procurement of grains. 

Consumer Business Division (CBD)

Consumer Business Division achieved net sales of AED 473 million, representing solid 26 percent growth year on year.

Water & Beverages segment net sales of AED 405 million grew by 26 percent year on year; while the Food segment (dairy, tomato paste, frozen vegetable,) net sales of AED 68.4 million grew by 23 percent versus last year.

Division’s net profit at AED 38.6 million grew by 16 percent compared to same period last year. Looking at Water & Beverages alone, profit of this segment grew by 46 percent versus last year, but was partially offset by AED 26 million losses of food segment (mainly from dairy and Egypt). Water & Beverage segment strong profit growth was driven by higher volume, 300 basis points gross profit margin improvement and full year impact of price increase. 

Future Outlook

Although regional economic uncertainty and the commodity market volatility suggest challenges,  the Company’s strong balance sheet along with sustained core business performance, clear strategy focusing on improving the performance of recently launched products and that of the Egyptian operation, geographical expansion, incremental brand building investment, manufacturing capabilities enhancements as well as further operating and cost efficiency improvements provide us with reason to remain optimistic on the Company’s prospects for future revenue and profit growth.