x Abu Dhabi, UAESaturday 20 January 2018

Agthia restructuring in Egypt as unrest eats into profits

The Abu Dhabi-listed food company says it was hit by both the regional uprisings and disappointing crop production.

Agthia, the regional food company, is in the process of restructuring its Egyptian business after disappointing crop production and unrest last year cut sales and profits.

"We felt the impact...due to domestic and regional unrest, lower than expected raw tomato and chilli harvest coupled with some operational and organisational issues," the Abu Dhabi-listed firm said in a filing to the capital's bourse yesterday.

"We are currently in the midst of restructuring and streamlining the operation and developing a plan at turning around the business in the short to mid-term."

Agthia set up a manufacturing facility for tomato and chilli concentrate in 2009, when it made its first entry into the Egyptian food market. The tomatoes are sourced from farms located about 75km north-west of Cairo, near the company's main office.

Profits from across the group surged 54 per cent in the third quarter after the company successfully managed to cut costs.

Net income rose to Dh92 million (US$25m) in the quarter. Agthia did not provide figures for last year.

Profit growth was driven by higher margins "resulting particularly from competitive procurement in grains, cost-saving initiatives, production capacity increases of flour and feed mills, displacing outsourcing and price increases", said Agthia.

Agthia is an important player in Abu Dhabi's food security strategy and is 51 per cent owned by the Government through the conglomerate Senaat.

It is split into three divisions: consumer, agriculture and Egypt.

The consumer business includes the production and distribution of Al Ain bottled water, frozen vegetable products, Isklar water, Chiquita juices and Yoplait dairy products.

Yoplait claims to be the second-largest brand in terms of sales in the fresh dairy product category worldwide and the biggest in the United States and Australia.

Agthia said it incurred losses of Dh21m in its consumer food segment, "mainly dairy and Egypt".

The company said it remained "optimistic" and expected another year of good business performance.

"Although the commodity market volatility and regional unrest are certainly challenging, we are progressing on our long-term strategy."