Agthia's first-quarter profit up 6% on higher revenue growth

Abu Dhabi-based food and beverage company Agthia Group reported about 6 per cent increase in its first-quarter net profit, as group revenue rose despite higher interest rates and a currency challenge in Egypt.

Profit attributable to the owners of the company climbed to Dh87 million in the three months to the end on March, from Dh82 million in the same period last year, the company said in a regulatory filing on Tuesday to the Abu Dhabi Securities Exchange, where its shares are traded.

The company's net revenue jumped by more than 12 per cent annually to Dh1.18 billion on the back of strong growth in its snacks and protein branches.

Group revenue growth, excluding the adverse currency challenge in Egypt, was nearly 23 per cent year on year, as increasing diversification by brand and geography enabled Agthia to "optimise product and channel mix" through the quarter, it said.

In December, Agthia completed the acquisition of a majority stake in Egypt's snacks and coffee producer, Auf Group. The deal to acquire a 60 per cent Auf stake for an undisclosed amount was first announced in July last year.

"Agthia’s continuing momentum in the first quarter of this year, nothwithstanding a challenging external environment, is testament to its progressive leadership and seamless execution of its strategy to become a leading food and beverage company in the Menap [Middle East, North Africa and Pakistan] region and beyond," said Khalifa Al Suwaidi, chairman of Agthia Group.

"I am confident that Agthia will continue to create value for all stakeholders in both the near and longer-term as it continues its journey”.

Agthia, which is owned by Abu Dhabi's state holding company ADQ, has been on a deal-making spree with the aim of becoming the biggest food and beverage company in the region by 2025.

Last May, it announced its expansion into Saudi Arabia with a greenfield investment worth Dh90 million that will be used to set up a plant in the kingdom.

Other acquisitions in the past two years include the world’s largest date-processing and packaging company Al Foah, Kuwait’s Al Faysal Bakery and Sweets, Jordan’s Nabil Foods, Egypt-based meat processor Ismailia Investments, also known as Atyab, and snacks maker BMB Group.

"Strong and profitable growth in our first quarter across both legacy and acquired businesses, despite continuing inflationary and FX [forex] headwinds, is a result of the tireless efforts and agility of all our colleagues across the group," said Alan Smith, group chief executive at Agthia.

"We continue to remain focused and agile in our execution, and I remain confident in the long-term growth trajectory of our business."

The company's balance sheet remained strong, with total assets of Dh6.8 billion at the end of 2022.

"Agthia’s balance sheet remained robust with cash and equivalents of Dh0.7 billion post Dh257 million of debt prepaid in the quarter," the company said.

Earnings before interest, taxes and amortisation (editda) growth was ahead of revenue, up nearly 19 per cent year-on-year to Dh188 million, or plus 31.7 per cent year-on-year "excluding the impact of the Egyptian pound devaluation".

It was driven by strong growth in snacks and water profitability, as well as scale economies across production and distribution and continued cost discipline, Agthia said.

"Egypt is a strategically important market for Agthia, not only in the favourable, long-term socio-demographics and structural demand for protein, snacking and coffee products, but increasingly as a manufacturing hub for key regional and international export markets, leveraging low-cost capacity in the group’s well-invested facilities," it said.

The company’s assets are in the UAE, Saudi Arabia, Kuwait, Oman, Egypt, Turkey and Jordan, with distribution in countries including China, India, Brazil and Indonesia.

Agthia also has a tie-up with retailers, including Walmart, to sell its products in the US, the world’s largest economy.

Currently, more than 51 per cent of its revenue comes from overseas markets, with Egypt being the main contributor.

The company is transforming its operations under a five-year growth strategy to become the region's top food and beverage company by 2025. It is aiming for an annual revenue of Dh6 billion in the next two years.

During the first quarter, Agthia also strengthened its export focused resource and saw encouraging progress through new food service volumes across the region, and vegetarian and plant-based orders into new international markets.

As the company continues to invest in innovation, Agthia launched the first locally produced, 100 per cent recycled polyethylene terephthalate water bottle in April, it said, adding that the move is also part of its sustainability agenda.

In the bottled water business, Agthia's brands include Al Ain Water, Al Bayan, Voss and Alpin.