Agthia, the Abu Dhabi-based company that produces Al Ain Water and Capri-Sun juice in the region, reported a rise in profits of more than 29 per cent in the third quarter.
But profits so far this year were still hampered by fluctuating commodity costs.
Compared with last year, the food producer's revenues rose about 8 per cent in the three months that ended on September 30 to Dh259 million (US$70.5m), while profits rose 29.4 per cent to Dh25m, it announced yesterday.
But Agthia's nine-month results showed a steep drop in profitability, at Dh79.18m, down 17.8 per cent compared with the same period last year.
"Strong growth momentum was maintained in the water and beverage division," said Ilias Assimakopoulos, the chief executive of Agthia.
"Strategy was adjusted and actions initiated in the processed fruits and vegetable division with the objective of returning to profitable growth. The management is focused on ensuring that animal feed business returns to normal levels of profitability."
Food has been a resilient retail category, even amid global economic uncertainty, but retailers and producers have had to cope with changing commodity prices.
This fluctuation worked to Agthia's benefit last year when its profits rose 44 per cent, boosted by higher profit margins in its flour and feed business. This year, however, the food producer is feeling the opposite effect.
Agthia's tomato paste and frozen vegetables division suffered a loss of Dh10.9m in the first nine months, due to "non-supply of subsidised fresh tomato from UAE farms, higher trade spent in export markets to support the newly opened distribution channels and the lower export price of tomato paste in the global market," it said.
While sales in the first three quarters of the year were up about 5 per cent compared with the same period last year, profit margins were cut due to lower market prices for feed against higher cost of grain, Agthia said in its directors' report.
A one-off problem at one of Agthia's flour mills also reduced total production volume by 6.6 per cent.
But the company's revenues received a major boost from its bottled water segment. Sales in the first nine months of this year rose 30.6 per cent compared with the same period last year to Dh193.9m, while profits rose 39 per cent to Dh35m.
It also realised Dh13m in "extraordinary income", including Dh6m in management fees for the procurement of wheat on behalf of the Abu Dhabi Government.
The Abu Dhabi-based producer is expanding in existing and new food categories.
Agthia is adding a new bottling line, which will start production this quarter and is setting up a new fresh fruit, juices and vegetable production facility at its factory in Al Ain.
"Agthia is capturing opportunities in its different growth pillars, in a global and regional economic environment which remains challenging … barring the recent surge in soft commodities prices, which may negatively affect the overall flour and feed industry's profitability, we remain optimistic about the prospects for a sustainable sales and profit growth," its directors report said.
