The company has posted a year-on-year drop in net profit by 23 percent in the first half of 2019 to AED 84 million from AED 109 million in the first half of 2019, a company filing on Abu Dhabi stock exchange (ADX) showed.
According to Al Wahedi, the company still managed to outperform peer companies in the region with 5.4 percent growth in revenues compared to last year’s first half.
“This growth mainly came from the contribution of our food sector, our international operations, our flour and water businesses,” he said.
Agthia’s total revenue reached 1.062 billion dirhams in first half of this year, up from 1.008 billion dirhams in comparison to first half of 2018. The company’s consumer business contributed 56 percent to the top line, and the remaining 44 percent was generated through its agri-business.
According to Al Wahedi, two factors at the beginning of this year led to a decline in the company’s profits: the total removal of subsidies from the bakery segment and an increase in commodity prices, especially of wheat.
“But as the year rolls on, the price increase will be passed onto the consumer, and we will manage to recover from that hit in profit in the second half of the year,” he said.
The company now has a 2.5 percent share in the massive Saudi market, according to the CEO, and the market leader in the Saudi market in this sector now has about 14 percent.
“We only started 2016 in Saudi Arabia, so it’s been almost 2 and a half years since we started, but today we are among the top 7 or 8 companies in Saudi Arabia in terms of market share,” he said.
“It is worth mentioning that there are around 200 water companies in Saudi Arabia,”
As for the Egyptian market, the company now has a market share that ranges between 3 to 4 percent, depending on the area in the country, Al Wahedi said.
“Our operation in Egypt is mainly driven towards exports… Last year, we managed to become the largest converter of tomatoes in Egypt. We have converted 140,000 tons of tomatoes,” he said.
According to Al Wahedi, the focus will continue to be on Saudi Arabia and Egypt as well as on finalising the project initiated in Iraq last year. However, they have started to look at the East African market.
On whether the company may revise its strategy going forward, he said: “Tactically, we might tweak few things in the strategy, but our strategy in the long run is the same”.
In 2015, Agthia announced its main strategy to maintain leadership position in the UAE market, and continue to grow the market at which it’s a leader in the water, flour, and animal feed segments, according to Al Wahedi.
“The second strategy was to build on our international business. From 2015, we have built our operations in Oman, Saudi, Kuwait, and we continue developing out Turkish and Egyptian businesses,” he said.
“We started our project in Iraq last year as well which is under commissioning right now,” he added.
Meanwhile, Al Wahedi expects an improvement in consumer trust index as governments take action in terms of increasing that confidence.
“We are seeing mixed messages this year; certain categories are growing, and others are de-growing. It is not a clear cut as bearish or bullish,” he said.
(Writing by Nada Al Rifai firstname.lastname@example.org , editing by Seban Scaria)
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