(MENAFN- Emirates News Agency (WAM)) Agthia Group, one of the UAE's leading food and beverage companies, has reported that net profit for Q1 2015 increased 22 percent from the same period in 2014 to AED59.2 million, driven by higher sales, improved margins and controlled overheads. Net sales for the period grew 11 percent to AED434.9 million.
Chairman of Agthia Group, Dhafer Ayed Al Ahbabi, said, "Agthia has made a strong start to the year. We continue to progress with our strategy of driving growth across all core categories, improving profitability, diversifying and launching new products, expanding distribution reach, strengthening brand support and, at the same time, addressing underperforming businesses."
Iqbal Hamzah, Chief Executive Officer, said, "The business has performed strongly in this first quarter, paving the way for another year of growth for Agthia. We have made good progress delivering on our primary objectives, such as growing revenues, driving profitability and improving the performance of Capri-Sun and our dairy category. With robust business fundamentals in place, and strong execution of our strategy, we aim to deliver encouraging returns to our shareholders."
The agri business, which manufactures and distributes Grand Mills flour and Agrivita animal feed products, saw net profit for the first quarter of 2015 increase 12 percent year-on-year to AED65.9 million, primarily driven by Agrivita which saw an overall increase in distribution. Net sales rose 6 percent to AED276 million. The business maintained its leadership position and grew its customer base in both feed and flour categories.
Agrivita added new municipality outlets, in-line with an accelerated development plan for the feed business, while Grand Mills flour gained customers following the expansion into retail and other emirates. A production capacity increase for poultry feed will be completed in May and will increase the current capacity by 13 percent. The agri business is also improving its retail flour offering by installing a new packaging line, which is expected to commence production next year.
The consumer business, which produces and distributes consumer brands including Al Ain Bottled Water, Alpin Natural Spring Water, Yoplait fresh dairy products and Capri-Sun juices, recorded a net profit of AED10 million for the quarter, a 32 percent increase. Net sales reached AED158.9 million, a growth of 22 percent year-on-year. The installation of the Al Ain high-speed bottling line last year, which expanded capacity by 60 percent, combined with increased margins resulting from lower PET usage and cost and production efficiency, helped drive profits in the division.
The unit's water and beverage segment was driven by Al Ain Water, which took the lead in terms of volume market share in the UAE. To meet current and expected demand, the group is adding a second high speed bottling line, which will be ready by mid-2016, increasing the existing capacity by about 40 percent, and expanding its distribution centres in Abu Dhabi and Dubai. Alpin Natural Spring Water continues to gain distribution and consumer offtake in Turkey. One bottling line has been transferred from the UAE to Turkey to meet the growing local demand, and a production capacity increase is on track for completion in Q2 2015. Capri-Sun also saw continued recovery of volumes and positive momentum in the first quarter of the year.
In the food segment, the dairy business gross margin has improved significantly and the group will continue to improve the profitability of this business by reducing costs, and adjusting product and distribution strategy. The frozen baked category saw nearly 50 SKUs (stockkeeping units) prepared in the quarter and customer acquisition is in progress. At the start of the year, Agthia signed an agreement with Monty's Bakehouse UK to manufacture their products for global airlines, which is on track for launch in Q3. Meanwhile, the Egyptian business is continuously improving. The tomato paste line became fully operational following its transfer from the UAE and the group is also exploring a number of potential opportunities to expand its operations and market presence there.
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