Agthia Group reports third quarter financial results

Agthia Group P.J.S.C., one of UAE’s leading food and beverage groups (ADX: Agthia), today released the Company’s financial results for third quarter ended 30 September 2012. The results highlight the Company’s strong performance for the nine months, with net sales growing by 17% to reach AED 983 million, and net profit rising by 54% to reach AED 92 million. Agthia’s strong sales growth was driven by the solid 24% sales growth achieved by the Consumer Business Division and strong 13% growth delivered by the Agri Business Division.

Growth was driven by continued strong performance of Agthia’s core businesses of bottled water, flour and animal feed, while priorities for the recently launched Yoplait fresh dairy products and Chiquita natural juices continues to be building strong in-store presence and visibility by driving distribution and penetration across all the retail segments. Yoplait & Chiquita volumes are 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 is close to completion, while plans to expand regional distribution in Turkey and launch ‘natural spring’ drinking water in the UAE and wider GCC are underway. The new initiative of frozen baked product launch is now planned for second half of 2013, while poultry feed production capacity expansion is on track for completion in the last quarter of 2012 and flour milling capacity increase is planned for the last quarter of 2013.

Commenting on the results, His Excellency Rashed Mubarak Al Hajeri, Chairman of Agthia Group said, “We are pleased with Agthia’s strong overall performance and have had a great year so far. Although the commodity market volatility and regional unrest are certainly challenging, yet we are progressing on our long term strategy. We remain optimistic and expect another year of good business performance in 2012.”

Ilias Assimakopoulos, Chief Executive Officer of Agthia, added, “Over the past few months, we have focused on both growing our core businesses while driving penetration and distribution of our recently launched brands. Various marketing activities have been initiated to address the softer than expected consumer off-take of the newly introduced Yoplait and Chiquita products. The Company’s strategic focus for the period has been to maintain growth momentum and to consolidate newly introduced products, driving the core businesses, expanding geographically into key markets while addressing the challenge of higher input cost by pursuing cost saving initiatives. We have a very strong and healthy balance sheet and we are optimistic and expect another year of good business performance in 2012.”

Sales:

For the nine-month period ended September 30, 2012, net sales grew 17 percent to AED 983 million versus last year mainly driven by solid 24 percent sales growth achieved  by the Consumer Business Division and strong 13 percent growth delivered by the Agri Business Division.

Net Profit:

Net profit of AED 92 million grew by 54 percent versus same period last year. Strong profit growth was largely driven by 4 percentage point improvement in gross profit margin resulting particularly from competitive procurement of grains, cost saving initiatives, production capacity increases of flour and feed mills displacing outsourcing and price increases and income from commodity derivative contracts.

Agri Business Division (ABD):

Net sales for the Agri Business Division of AED 638 million for the nine-month period ended September 30, 2012 increased by 13 percent compared to same period last year mainly driven by volume growth.

Net profit of AED 99.8 million grew by 60 percent compared to same period last year contributed by 560 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 & feed and competitive procurement of grains.

Consumer Business Division (ABD):

Net sales for the Consumer Business Division of AED 345 million for the nine-month period ended September 2012 increased 24 percent compared to same period last year.

Water & Beverages segment net sales of AED 297 million grew by 26 percent year on year; while the Food segment (dairy, tomato paste, frozen vegetable, Al Ain Fresh) net sales of AED 48 million grew by 13 percent year on year.

Division’s Net profit at AED 26.6 million grew slightly by 3 percent compared to same period last year. Looking at water & beverages alone, profit of this segment grew by 58 percent versus last year, but was partially offset by AED 21 million losses of food segment (mainly dairy and Egypt). Water & Beverage segment strong profit growth was driven by higher volume, 300 basis points gross profit improvement and full year impact of price increase.

Agthia has had a great year so far. Although the commodity market volatility and regional unrest are certainly challenging, yet we are progressing on our long term strategy. We remain optimistic and expect another year of good business performance in 2012.