Agthia Group posts 6.6% increase in first-half profit to Dhs144m

Image credit: Agthia Group/ Instagram

UAE food and beverages group Agthia reported a 6.6 per cent increase in first-half profit, despite the currency headwind in Egypt and some demand phasing in Q2 2023 from the earlier Ramadan and Eid holidays.

Net profit rose to Dhs144m, with the slower rate of growth relative to earnings before interest, taxes, depreciation and amortisation (EBITDA) reflecting the higher interest rate environment (interest costs Dhs34m year-on-year), Agthia said in a regulatory filing.

The group’s revenues in the six months to June 30 surged by 10.3 per cent year-on-year (YoY) to Dhs2.2bn (3.6 per cent growth from pricing and 6.7 per cent from volume), reflecting a strong volume and value performance from dates, underpinned by premiumisation and innovation.

قال آلان سميث، الرئيس التنفيذي للمجموعة: “هناك الكثير مما يجب أن نفخر به على مدار الأشهر الستة الماضية، بدءًا من إطلاق المنتجات المبتكرة في أسواق جديدة قابلة للتطوير وتعزيز مجلس الإدارة والفريق القيادي في مجموعة أغذية، pic.twitter.com/THZLIpmS91

— Agthia Group (@AgthiaGroup) August 2, 2023

“Agthia’s results for the first six months of the year further demonstrate the management’s ability to successfully consolidate value-accretive businesses and leverage synergies while maintaining a profitable core, across all economic cycles,” said Khalifa Sultan Al Suwaidi, chairman of Agthia Group.

Agthia said its revenue rose by more than 20 per cent YoY after adjusting for the impact on revenue from currency devaluation in Egypt (Dhs197m), with the growth of 45 per cent and 12 per cent respectively from the snacking and agri segments.

The protein and frozen segments contributed 21 per cent to the group’s revenues – excluding currency impact – while the water and food division contributed 6 per cent.

The food and beverage firm’s EBITDA grew ahead of revenues to Dhs318.8m in H1 2023, up 18.3 per cent YoY, reflecting strong growth in profitability across snacking and water, a laser focus on profit protection in Egypt, as well as further group-wide production and distribution economies.

Agthia’s balance sheet remained robust with cash and equivalents of Dhs6m post Dhs579m of debt prepaid in the year to date. The group’s net debt to EBITDA ratio of 1.9x (net debt of Dhs1.2bn) was down from 2.3x as of December 2022.

Agthia’s growth strategy

Meanwhile, ADQ-backed Agthia has made several acquisitions and investments across the Middle East to grow its regional footprint while contributing to the UAE’s food security strategy.

The group launched a $54m corporate venture capital fund, Agthia Ventures, in July to help food and beverage companies to scale their operations and accelerate product development and market adoption.

Agthia Ventures, which is partially funded by ADQ, will be co-managed by US-based Touchdown Ventures, a US-based agency creating venture capital programs for corporations.

The fund is stage-agnostic and it will invest primarily in companies with clear product-market fit that are demonstrating revenue growth. Investments will focus on brands, categories and solutions across Agthia’s portfolio that are both complementary and adjacent to the group’s business model.

Agthia said the Egyptian market is strategically important not only in the favourable, long-term socio-demographics and structural demand for protein, snacking and coffee products, but increasingly as a cost-effective manufacturing hub for key export markets across the MENA region.

On the sustainability front, the group made continued progress across the four pillars of its sustainability agenda in the first half of the year by reducing its water usage ratio and greenhouse gas emissions scope 2 emissions by 2.5 per cent and 2 per cent respectively.

Read: Abu Dhabi-based Agthia Group launches $54m CVC fund