Abu Dhabi–based food and drinks group Agthia is targeting a savings of 200 million dirhams ($54.45 million) in the next five years through synergy extraction and sale of non-scalable assets, as it looks to position itself as an F&B leader in MENA and Pakistan.
It will do so by upscaling in priority markets, expanding into value-add categories and driving margins improvement by 2025.
In addition, Agthia will continue its inorganic growth strategy of acquiring companies with strong consumer brands that are market leaders in their respective categories, the company said.
At a virtual conference held Monday to unveil its strategy through 2025, CEO Alan Smith said the company’s “three strategic pillars of growth, efficiency, and capability as planned for the next five years is designed to extend the group's market leadership, drive significant value for our stakeholders, and improve profitability through a consumer driven approach.”
The Abu Dhabi-listed company is engaged in manufacturing, distribution and marketing of a wide range of F&B products, including water and flour.
Agthia recently acquired Jordan-based frozen protein products brand Nabil Foods. Last year it acquired two companies, a local dates and confectionary firm, Al Foah in the UAE, and Al Faysal Bakery in Kuwait. Earlier this month it announced plans to take a majority stake in Ismailia Investments, an Egyptian producer of frozen processed chicken and beef products.
As part of its five-year plan, Agthia has also added Pakistan as a priority market as that is a big population center.
“We aim to grow from being a UAE centric organisation to live in our footprints across the MENA region and beyond. We have already set in motion plans to diversify our business into more value-added products and brands to unlock value and enhance shareholder returns,” Smith said.
Ammar Al Ghoul, Chief Financial Officer, said the company plans to finance the Egyptian purchase through a combination of debt and internal cash resources. Agthia has a borrowing capacity of between 1.2 to 1.3 billion dirhams and will be able to expand its future borrowing capability as the its target acquisitions are accretive from a valuation perspective.
“So, at least for the coming year, I don't see any obstacle for raising debt and utilising the cash resources available today. We have on the balance sheet of approximately 650 million dirhams of cash available after taking into consideration the recent dividend distribution announcement, so that together with the borrowing capacity we have enough to fuel the company’s appetite for future M&A at least for the coming year or so,” Al Ghoul added..
Agthia, which is 51 percent owned by Abu Dhabi’s investment holding company Senaat, went through significant changes in 2020, including the election of a new board, and a leadership reshuffle.
(Reporting by Brinda Darasha; editing by Seban Scaria)
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