AGTHIA REPORTS STRONG GROWTH FOR THE SECOND QUARTER OF 2009 GROUP WELL POSITIONED AND REAPING BENEFI
Agthia Group P.J.S.C., a leading Abu Dhabi based food and beverages group (ADX: Agthia), today reported its results for the first six months of 2009. The key highlights are below:
• Strong sales growth of 18% reaching AED 234 million
• Gross profit margin, up 9.7 percentage points to 28.7%
• Net profit rose by 51% to AED 29.4 million
• Group sales soared to AED 456 million, up 18.7% versus H1 2008
• Gross profit margin reached 32.1% up from 20.7% in 2008
• Group's net profit doubled to AED 75.9 million compared to AED 37.9 million in H1 2008
Commenting on the results, His Excellency Rashid Mubarak Al Hajeri, Chairman of Agthia, said: "Agthia's results have maintained strong growth momentum throughout the first half of the year, despite challenging market conditions, which is testament to the defensive nature of the food and beverage sector. The growth registered this quarter builds upon the strong first quarter performance and sets a positive scene for the rest of the year. Agthia's performance for the first half of 2009 demonstrates the strength of the company's core businesses and the effective implementation of management's strategic and financial initiatives."
Ilias Assimakopoulos, Chief Executive Officer of Agthia, added: "Agthia has made many strategic advancements in the first half of 2009 including the further diversification of the Group's business lines as well as broader regional expansion. These enhancements, along with a focus on maximising operational efficiency and the resulting financial performance is working towards meeting Agthia's overriding business mission: to create the Best Food and Beverage Company in the UAE."
Consolidated Results Analysis
Building on first quarter success and the foundations laid by the similarly healthy 2008 performance, growth has continued apace in the second quarter of the year. Half year sales increased by 18.7% to AED 456 million, compared to AED 385 million in the same period last year. The boost in revenue has been predominantly driven by sales volumes, with Flour and Feed registering a 7.6% increase (16.6% volume growth), Water and Beverages recording a 42.8% growth, compared to same period last year. The Tomato Paste and Frozen Vegetables (TP & FV) business which was not consolidated in 2008, contributed AED 20 million, which equates to 4.4% of the Group's total sales for the period. This upward sales volume trend is primarily attributable to increasing brand recognition and value, the introduction of new products and improved marketing and distribution strategies.
Agthia's profits in the first six months of 2009 almost doubled compared to the same period last year due in particular to an improved gross profit margin in both the Flour and Feed and Water businesses. The margin improvement was a result of a decrease in wheat costs, while market selling prices of Flour did not drop in line with the related decline in wheat prices coupled with ongoing cost saving initiatives.. However, the significant rise in profitability is not expected to continue at the same level during the second half of 2009, given that the flour & feed market prices have started to decline in line with the related fall in grain prices.
The increase in Selling and General Administration Expenses (SG&A) is primarily due to the new businesses initiatives, in particular the TP & FV and Capri Sun, which were not included in last year's consolidated results. The addition of Capri Sun products to the Agthia group portfolio in the first six months of 2009 has been a success. The new product line has integrated well and is set to develop throughout the rest of the year. Commercial production of tomato paste concentrate started at Agthia's new factory in Egypt towards the end of June.
Feed and Flour
Agthia's Flour and Feed business continued its strong performance over the period in review. The division's net sales increased 7.6%, year on year, for the first six months of 2009 to AED 345 million. Sales volume grew by 16.6% and remained the main driver for sales growth, absorbing the impact of declining flour & feed consumer prices over the period. The declining prices may however make an impact on the second half's results, despite sustainable volumes.
76% of total group revenues for the first half of the year has been generated by the Flour and Feed business. This division's contribution has declined from 83.5% at the end of the six months ending 30th June 2008 and the reduction is in line with the Group's strategy to reduce reliance on the Flour and Feed business and to diversify into higher margin businesses.
Water and Beverages
Sustaining the momentum generated by the first quarter results, the Water and Beverages business delivered strong half-year sales amounting to AED 91 million, a 42.8% increase from the same period last year. The Water and Beverages business now represents an important 19.9% of total group revenues, up from 16.5% last year.
Gross Profit Margin likewise increased to 43.2% in the first half of the year, compared to 42.5% in the same period last year. This increase in profitability is the effect of pricing, cost saving measures and the related drop in PET prices.
Agthia's new Capri Sun plant started production and distribution in the period under review. The factory is running at full capacity and an additional filling line has been ordered to meet future demand. The Capri Sun franchise is an essential step in expanding Agthia's regional footprint and diversifying its product range.
Tomato Paste and Frozen Vegetable
This new division posted good half year results, generating AED 20 million of revenues which represents 4.4% of total group revenues. The business also registered a gross profit of AED 6.5 million in the six months ending 30th June 2009.
Following the successful inauguration of and commencement of production at the factory in Egypt in June, sales will commence in July 2009. This facility will provide tomato paste raw materials for Agthia's Al Ain Factory and for direct export to the international market.
Agthia is a leading Abu Dhabi based food and beverages group established in 2004 as part of the Abu Dhabi Government's privatization initiative to revitalize industry in the increasingly diversified and rapidly developing economy.
The company listed its shares on the Abu Dhabi Securities Exchange (ADX) in 2005 and has the symbol "Agthia". 51 percent of the Company's shares are held by General Holding Corporation, an Abu Dhabi Government entity, with the balance held by individual and institutional investors.
Agthia's mission is to create a world class portfolio of integrated businesses delivering high quality, trusted and innovative food and beverage products to consumers across the region.
Agthia has around 1500 employees across its four fully owned subsidiaries; Al Ain Mineral Water, a leading producer of high quality bottled water and beverages; Grand Mills for Flour & Feed, a pioneer in the production of high quality flour and animal feed; Al Ain Vegetable & Tomato Paste, a leading manufacturer of tomato paste, canned and frozen vegetables and Al Ain Food & Beverages, an Egypt-based producer of tomato paste concentrate. The company has assets in the UAE and Egypt and its products have a presence in the Oman, Bahrain, Qatar & Saudi Arabia markets.
For more information, visit www.agthia.com
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