Company update: Agthia Group H1 2011
Agthia Group, one of UAE’s leading food and beverage groups, has maintained its growth momentum in all categories in the first six months of 2011, registering a 17% increase in year on year net sales, reaching AED 559 million (€105m).
Among the highlights of first half of 2011, Agthia’s Water & Beverages segment achieved sales growth of 26% to record AED 155 million (€29.1m), while the Flour and Animal Feed segment grew 14% year on year to achieve AED 376 million (€70.7m).
The Company also announced the recent completion of its flour mill expansion project, anticipating a similar expansion in its animal feed mill to be completed by Q4 2011. These expansions are expected to improve profitability in Flour and Animal Feed segment.
Net profit down
Net profit for the first six months at AED 40 million reflects a drop of 25% versus the same period last year. This drop is mainly attributed to two factors (1) the continued increase in input cost of raw materials (grains and PET) and (2) during the same period last year Company’s Flour business benefited from a decline in wheat prices which outpaced the drop in the market selling price of flour resulting in higher one off profit margin.
Flour and animal feed
The Company’s Flour & Animal Feed business recorded a net sales growth of 14% year on year to AED 376 million, driven by pricing and 6% volume increase. Net Profit for the segment has declined by 30% year on year.
Actions are under execution to improve the profitability of this segment which among others include the production capacity expansion of existing flour & animal feed mills.
This incremental capacity will replace the currently higher cost of outsourced volume. The flour mill expansion has been completed in mid July while the feed mill expansion has now been delayed until Q4, 2011 due to some technical reasons.
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