Dubai Refreshments, the bottler and distributor of Pepsi products in Dubai and the Northern Emirates, cracked open the third-quarter earnings season yesterday with a 29.8 per cent rise in profits.
The company reported income of Dh16.1 million (US$4.3m) for the quarter, compared with Dh12.4m in the same period last year. It was the first set of results to be reported by a publicly held company for the three-month period that ended last month. Dubai Refreshments is listed on the Dubai Financial Market.
The company's shares opened trading yesterday up 4.75 per cent from Thursday's closing price but ended the day flat at Dh6.84. The results were announced after the market closed, however. The rise in profits came despite higher global sugar prices and an as-yet unsuccessful bid by the company to increase the price of a can of fizzy drink. Cans of products made by Pepsi and its main rival Coca-Cola have been fixed since the 1970s at Dh1, but bottlers and distributors of both companies' products want to raise prices to reflect higher costs.
Dubai Refreshments applied for permission from the Government to raise prices earlier this year but had not yet received approval. An increase in prices could boost profits for companies such as Dubai Refreshments, but it could also arouse consumer discontent. "Sugar has had a multimillion-dirham impact on us, and effectively if there is nothing to upset the sugar price rise somehow, it would wipe out every single company's profitability," Tarek el Sakka, the general manager of Dubai Refreshments, told The National in January. "If it continues to rise, then we have no other choice than to increase prices. But we haven't taken that decision yet."
Dubai Refreshments executives refused to comment on its results or the status of plans for a price increase. The positive results for Dubai Refreshments follow strong third-quarter profits at PepsiCo. The American food giant reported an 11.9 per cent rise in third-quarter profits last week to $1.9 billion, driven by strong sales in Latin America. The results also kick off a third-quarter earnings season that analysts expect to be a modest improvement on last year as the lingering effects of the global financial crisis are still felt.
* with reporting by Hadeel al Sayegh