What's Up: Agthia, the Abu Dhabi food producer, grew profits 21 per cent in the first quarter, as its consumer division performed strongly.
Agthia serves up tasty treat but shares go off
Agthia, an Abu Dhabi food producer, announced yesterday it grew profits by a tasty 21 per cent in the first three months of the year.
However, it was subsequently rewarded by investors with a 2.3 per cent fall in its share price.
Despite the strong profits performance, investors seemed to be in the mood for harvesting their own take after a more than 25 per cent increase in the share price since the turn of the year.
But the company could still have some juicy potential in it yet, according to analysts, who expect Agthia to increase profit margins in the next three to five years. That could mean bumper crops ready to be returned to shareholders in a few years.
"A key criterion utilised by Agthia for adding new products to its portfolio is that they enhance overall margins," said Asjad Yahya, an analyst at Shuaa Capital, in its most recent research note, published at the beginning of the year.
"For example, the dairy business line recently launched by the company is projected to have margin in the range of 40 to 45 per cent against 2011 margin of 20.5 per cent for the company as a whole."
To grow profit margins, Agthia is diversifying its business by investing in new consumer products and new geographies, having bought a spring water company in Turkey last month.
"We continue to focus on growth opportunities by consolidating the newly introduced products, driving the core business, expanding geographically, while addressing the challenge of higher input costs by pursuing cost savings initiatives," said Ilias Assimakopoulos, the chief executive of Agthia, announcing the results.
In the first three months of this year, Agthia's sales grew by 12 per cent to Dh311 million, compared with the same period last year. Net profit was Dh27m.
The performance was driven by a 17 per cent sales growth delivered by the consumer business, which benefited from the launch of Yoplait fresh dairy products and Chiquita natural juices in the quarter.