UAE food group Agthia posts 32% drop in third-quarter profit as cost of sales soars

UAE food and beverage company Agthia posted a 31.88% drop in third-quarter profit as cost of sales soared.

The bottled water and agri-business company reported in a bourse filing on Sunday 33.15 million dirhams ($9 million) in profit for the three months ending September 30 compared to 48.67 million dirhams ($13.25 million) for the same period last year.

Agthia’s revenue growth was lower than for its cost of sales. Revenue grew 1.93% to 486.11 million dirhams ($132.36 million) but its cost of sales increased 5.53% to 326.75 million dirhams ($88.97 million) compared to the same quarter last year.

NINE-MONTH PERFORMANCE

The group’s profit for the nine months through September 30 reached 116.49 million dirhams, down 25.41% from the same period last year. 117.2 million dirhams is attributable to the company’s owners.

“Group net profit stood at AED 117.2 million, amidst withdrawn bakery channel subsidy, which is the largest contributor in the shortfall, supplemented by the de-growth in bottled water category in the UAE and the rise in commodity prices (wheat and feed grains),” said Agthia in a statement.

For this period, revenue grew 4.3% to 1.55 billion dirhams but cost of sales ballooned 8.67% to 1.05 billion dirhams.

CONSUMER AND AGRI-BUSINESS    

Its consumer business contributed 877 million in revenue for the nine-month period, accounting for 57%, and agri-business 43%, said Agthia.

The company is behind brands including Al Ain and Grand Mills as well as Yoplait in the UAE.

Water and beverage is its biggest business line, earning it 690 million dirhams in revenue, a 3.5% growth year-on-year.

Agthia said its top-line growth for Saudi Arabia was 42.3% and that its “beyond-expected” progress in Kuwait added to its positive performance in its international portfolio.

At home, its consumer business division grew 6.3% largely as a result of higher shipped volumes of 5-gallon bottled water.

Net revenues in the food segment increased by 26.2% year-on-year. This was largely driven by ‘trading items’ that constituted 51% of the food segment and on its own grew by 60% year-on-year on new SKUs, said Agthia.  

In the agri-business division, animal feed revenues dropped by 8.7% on reduced volume due to lower grain sales and lower demand from small-sized farms, it said.

Flour revenues rose 14% to 300 million dirhams on elevated domestic and exported volume plus wheat sales.

($1 = 3.6725 Emirati dirhams(

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