Accumulated losses of Dubai’s water bottling company Emirates Refreshments have reached nearly half of the capital despite a rise in revenue, as high energy prices eroded the company’s margins. 

Accumulated losses as of March 31, 2022 stood at more than 12.9 million dirhams ($3.5 million), representing 43.25 percent of the capital. Revenue for the first quarter of the year rose by 66 percent compared to the previous year, while gross profit went up 45 percent to 0.84 million dirhams. 

The company said that while higher sales and cost savings helped the company achieve “strong top line and bottom-line growth” in the first three months of the year, the high cost of raw materials and tough competition in the market still impacted its business. 

“Recent geo-political issues (Ukraine war and lockdown in China) have impacted [the] global economy drastically. There is a huge price increase in raw material prices,” the company said in a disclosure on the Dubai Financial Market (DFM). 

The price of resin and other plastic-related materials jumped by 20 percent to 40 percent. There is also a shortage of raw materials, as suppliers resorted to stockpiling for “future contingencies”. 

“Constant and comparatively doubling of the fuel prices versus previous years had eaten up margins being fuel as an important factor in business operations,” the company said.  

“Tough price competition with big market leaders has further impacted the business as retaining the private label customers is becoming a challenge.” 

To address accumulated losses, shareholders during a general assembly had approved a proposal to raise the company’s share capital from 30 million dirhams to 330 million dirhams.

(Reporting by Cleofe Maceda; editing by Daniel Luiz)