Agthia Group Reports AED 3.27 Billion Net Revenue During The First Nine Months 2023
Agthia Group PJSC, one of the region’s leading food and beverage companies, today announced its results for the nine months ending 30 September 2023. Agthia’s strong performance in the first half continued into the third quarter, with profitable growth across the Snacking, Water & Food and Agribusiness segments, combined with leveraging group-wide efficiencies, resulting in both EBITDA and net profit growing faster than revenue.
Financial highlights
- Group net revenue increased 10.9% year-on-year to AED 3.27 billion (9.1% growth from volume# and 1.8% from pricing), with a strong performance from the Snacking, Agribusiness, and Water & Food segments mitigating the adverse impact of continued currency devaluation in Egypt, increasing localisation in Saudi Protein, and a more competitive and price-sensitive backdrop in Jordan.
In Agthia’s Snacking segment, product and packaging innovation in dates combined with a premiumization shift in consumer demand to drive strong value growth across both UAE and international markets. In Agribusiness, market share gain in Flour was underpinned by new premium and specialty products, with solid growth in Feed revenue supported by good open market execution, participation in Abu Dhabi Agriculture and Food Safety Authority’s (ADAFSA) compound feed program, and a growing proportion of sales through Agrivita’s unique app, which increases competitive advantage.
Agthia’s Water & Food segment saw positive volume growth in the UAE and internationally, with notable performances from Saudi, Kuwait, and Turkey. Al Ain bottled water retained its market leading position in the UAE.
Adjusting for the impact on revenue of currency devaluation in Egypt (AED -287.4 million), Group net revenue increased +20.7% year-on-year, with growth of 46.5% and 15.0% respectively from the Snacking and Agribusiness segments, 19.4% growth from Protein and Frozen excluding currency impact, and 6.6% growth from Water and Food. LFL revenue, including Abu Auf in the prior comparable period, increased 3.5% year-on-year in AED terms, or 12.6% excluding FX impact.
- EBITDA growth was ahead of revenue, up 18.0% year-on-year to AED 465.1 million (+30.3% excluding currency headwind), reflecting strong growth in Snacking, Water & Food and Agribusiness profitability, combined with a continuing focus on profit protection in Egypt and group-wide efficiency generation.
In Agthia’s Snacking segment, EBITDA growth of 73.4% (+52.2% in Q3 year-on-year) was driven by a strong performance in both domestic and international date markets, together with strong growth in Abu Auf’s (Egypt) market-leading premium coffee, and a step up in profitability from BMB post operational restructuring in Saudi.
EBITDA growth of 16.7% (+47.9% in Q3 year-on-year) in Agribusiness was underpinned by good execution across commercial farms and the open market, cost efficiencies in Flour, and a more favorable commodity backdrop. In Water & Food, a combination of positive growth across UAE and international channels, favourable mix and further cost efficiencies in the UAE and Saudi, resulted in EBITDA growth of 26.6% year-on-year (+55.5% in Q3).
- Group net profit1 increased 12.7% year-on-year to AED 205.6 million, with the faster rate of growth relative to revenue reflecting EBITDA margin expansion as well as the cumulative repayment of AED 928 million of debt in 2023 to date.
- Strong balance sheet: Agthia’s balance sheet remained robust with cash and equivalents of AED 0.5 billion. The Group’s net debt to EBITDA ratio of 1.4x (net debt of AED 0.9 billion) was down from 2.3x as at December 2022.
Strategic highlights
Good progress was made throughout the year to date in expanding the Group’s capabilities and efficiencies to future proof growth.
- Leveraging Agthia’s Egyptian platform: Agthia strengthened its export focused resource during the year, with new Food Service volumes in both regional and international markets underpinning growth in export revenue from Egypt of 33% year-on-year to AED 55.6 million. Abu Auf also launched a number of new SKUs into UAE channels during the third quarter.
- Investing in innovation: Innovation is the lifeblood of Agthia and plays a vital role in its strategic vision of being a leading food and beverage company in the MENA region and beyond by 2025, from innovative products that meet the evolving needs of consumers to process innovation that underpins a strong commitment to the planet. Notable initiatives across the Snacking segment in Q3 included:
- Al Foah dates launching new brands ‘Freakin Awesome whole and stuffed dates’ into UK and European Retail channels, new formats and adjacent category products into the UAE (stuffed dates pouch, Maamoul biscuit category) and new consumption occasions into India (limited edition Diwali gifting packs);
- BMB launching new premium and value chocolate brands targeting UAE and KSA chocolatiers, expanding into new categories (caramelized / choco nuts and choco dates) in the UAE, Saudi and Qatar, and launching new ‘Freakin Wholesome filled dates’ into a key US retailer;
- Abu Auf launching several new products and line extensions (including Protein Truffles and Spice Pouches) to strengthen its position in Egypt and grow export volumes to the UAE.
Agthia also launched a number of new products in its Agribusiness segment to support its participation in ADAFSA’s compound feed program, including Mumtaz Premium Mixed Grain and Agrivita Ruminants Feed 13%.
- Progressed the Group’s sustainability agenda: Agthia made continued progress across the four pillars of its sustainability agenda and, during the nine months, reduced its water usage ratio by 8.6%. Other key initiatives during the year included:
- Developing Agthia’s Responsible Sourcing Policy, which aims to integrate responsible procurement across all its suppliers and raw materials in order to promote sustainable processes throughout its value chain;
- Helping to uplift local communities through wide-ranging CSR initiatives across each of its business segments, including but not limited to 1) co-operation with the Red Crescent and donations to the Egyptian Food Bank through distribution of food parcels and boxes during Ramadan 2) its “Goodness Begins Here Campaign” which included a commitment to community service, volunteerism, and a specific Ramadan CSR Program 3) supporting the King Hussein Cancer Foundation and Center and other charitable causes and 4) participating in the Riaya Program to help support local farmers in the UAE;
- Initiatives to reduce CO2 emissions through operational efficiencies and investment in renewable energy sources, including 1) launching the first locally sourced and produced 100% rPET water bottle, and the continuing partnership with Veolia on the RECAPP program for curbside collection of recyclables such as PET, Aluminum, and HDPE to help drive circularity 2) reducing the energy ratio consumption in Grand Mills and Al Ain through a real-time smart energy monitoring system, as well as the installation of solar panelling across other sites, with the aim of reducing CO2 emissions by 11,000tn (15% of total emissions) over the next three years.
Agthia also gained recognition at the Asian Water Awards 2023 for its sustainability initiatives and optimally balanced Zinc water (AL Ain Plus).
- Accelerating the digital roadmap: Agthia continued to progress its 5-year digital transformation journey, creating the foundations to transform it into a consumer data-driven organization. The Group grew its Digital & Technology competence center with new hires, released new features for its Water Home Delivery business, thereby improving services to and interactions with customers, and launched new companies on its Dates platforms. Agthia’s Al Ain brand has been nominated for three digital awards in the annual MENA Digital Awards, and its Agrivita Farmer application has seen good growth in downloads and orders.
Agthia’s recently signed Memorandum of Understanding (MoU) with Microsoft UAE marked a significant milestone in its journey to become a regional digital leader in the consumer-packaged goods industry, enabling it to utilize new tools to navigate the digital landscape and identify opportunities for market expansion, operational excellence, and commercial success, while accelerating innovation and responsible, sustainable business practices throughout the FMCG value chain.
Khalifa Sultan Al Suwaidi, Chairman of Agthia Group, commented: “Agthia’s third quarter results demonstrate continued progress against strategic objectives, namely protecting the core business, reaping the rewards of recent value-accretive M&A, and investing in capability and innovation to deliver on its vision to become a leading food and beverage company in the MENA region and beyond. At a time when the world’s attention is focused on decarbonization initiatives across the region, I am particularly pleased with the progress made across its sustainability agenda and am confident that Agthia will continue to create value for all stakeholders in both the near and medium term.”
Alan Smith, Group Chief Executive Officer, commented: “Another strong and profitable outturn this quarter, accompanied by continued investment in capability to future proof growth, is testament not only to Agthia’s strategy of acquiring, integrating, and growing attractive businesses in value-add categories, but also to the efforts of each of its valued colleagues across the Group. While sector-leading growth is an overarching aim of Agthia’s strategy, achieving this sustainably is of paramount importance, and I am pleased to see the good progress across our ESG agenda, not only through the wide-ranging initiatives and specific investment we are undertaking, but also our robust approach to governance and success in generating a one voice culture on sustainability.”
