Agthia Group announces its H1 2023 results

ABU DHABI: Agthia Group PJSC, one of the region’s leading food and beverage companies, today announced its results for the six months ending 30 June 2023. The Group delivered a strong performance during the first half – despite the currency headwind in Egypt and some demand phasing in Q2 from the earlier Ramadan and Eid holidays – with double-digit EBITDA growth reflecting strong growth in profitability across Snacking and Water, a laser focus on profit protection in Egypt, as well as further group-wide production and distribution economies.

Financial highlights Group net revenue increased 10.3% year-on-year to AED 2.2 billion (3.6% growth from pricing and 6.7% from volume#) reflecting a strong volume and value performance from dates, underpinned by premiumization and innovation, and good growth in Flour, our Food Portfolio, and international Water, which cushioned the adverse impact of currency devaluation in Egypt, price-elasticity in Saudi Protein and a more promotional and competitive landscape in Jordan.

Adjusting for the impact on revenue of currency devaluation in Egypt (AED -197 million), Group net revenue increased +20% year-on-year, with growth of 45% and 12% respectively from the Snacking and Agri segments, 21% growth from Protein and Frozen excluding currency impact, and 6% growth from Water and Food. LFL revenue, including Abu Auf in the prior comparable period, increased 3.1% year-on-year in AED terms. EBITDA growth was ahead of revenue, up 18.3% year-on-year to AED 318.8 million (+31% excluding currency headwind), reflecting strong growth in profitability across Snacking and Water, a laser focus on profit protection in Egypt, as well as further group-wide production and distribution economies. In Snacking, strong pricing, favourable channel mix, and manufacturing efficiencies in our dates business was accompanied by double-digit EBITDA growth at BMB post channel and production optimization in Saudi. In Water and Food, strong growth across the international footprint, as well as cost efficiencies in Saudi and UAE water countered a lower margin mix and commodity inflation in the Agri-business.  Group net profit1 increased 6.6% year-on-year to AED 144 million, with the slower rate of growth relative to EBITDA reflecting the higher interest rate environment (interest costs + AED 34 million year-on-year) compared to the prior year. Strong balance sheet: Agthia’s balance sheet remained robust with cash and equivalents of AED 0.6 billion post AED 579 million of debt prepaid in the year to date. The Group’s net debt to EBITDA ratio of 1.9x (net debt of AED 1.2 billion) was down from 2.3x as at December 2022.

Strategic highlights

Good progress was made throughout the first half in expanding the Group’s capabilities and efficiencies to future proof growth. Leveraging Agthia’s Egyptian platform: Egypt is a strategically important market for Agthia, not only in the favourable, long-term socio-demographics and structural demand for Protein, Snacking and Coffee products, but increasingly as a cost-effective manufacturing hub for key export markets across the GCC and North Africa.

During the half, Agthia strengthened its export focused resource and has already seen encouraging progress, with export revenue +18.2% year-on-year in AED terms, helped by new Food Service volumes in regional markets such as Jordan, Kuwait, and Bahrain, as well as vegetarian and plant-based orders into new international markets. Abu Auf is now selling Al Foah Date Crown and BMB ranges through its domestic channels in Egypt, sourcing Egyptian dates for Al Foah, and is scoping opportunities to increase export of its premium branded coffee, nuts, and healthy snacks. 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.

As part of its growing innovation pipeline, Agthia launched the first locally produced 100% rPet water bottle in April, and a new functional water, “Al Ain Plus” in May, fortified with Zinc & Magnesium to meet the growing demand for healthier products and lifestyles. In our snacking portfolio, rollout of new gifting and value-added ranges in dates (for example, chocolate enrobed dates), as well as product and packaging innovation (snack packs, date pouches) have supported strong growth across the category, with BMB recently launching a new travel retail range, initially in Dubai International airport.

Agthia was also awarded the “Quality Standards Award” by the Ministry of Industry and Advanced Technology at the “Make It In The Emirates” Forum, in recognition of its commitment to setting a new benchmark for the industry and providing consumers with consistently secure and reliable food products. Launch of “Agthia Ventures”: Post the period end, Agthia launched “Agthia Ventures”, a Corporate Venture Capital (“CVC”) Fund, designed to expand its innovation capabilities as it continues to drive profitable growth in both new and existing markets.

Funded by Agthia and its parent company ADQ, an Abu Dhabi-based investment and holding company, the fund will be managed together with Touchdown Ventures, a global leader in establishing and operating bespoke CVC programs for blue-chip corporates, with over 100 completed venture investments to date. Investments will focus on opportunities in branded products and emerging food and value chain technologies globally – for example in snacks and beverages, novel ingredients and proteins, innovative packaging solutions, etc.  Progressed the Group’s sustainability agenda: Agthia made continued progress across the four pillars of its sustainability agenda and, during the half, reduced its water usage ratio and GHG scope 2 emissions by 2.5% and 2.0% respectively, and electricity consumption by 2.1%.   Accelerating the digital roadmap: Agthia progressed at pace during the half on our 5-year digital transformation roadmap, creating the foundations to transform Agthia into a consumer data-driven organization. The Group is one of the first UAE companies to launch Microsoft co-pilot (ChatGpt engine) in its Water Home Delivery Contact Center, improving its services to and interactions with customers. The Group also finalized a memorandum of understanding and cooperation with Microsoft, which enables it to accelerate its B2B route-to-market digitization, improve operations in retail stores, modernize internal ways of working, and increase employee engagement and productivity. Agthia is growing its Digital & Technology team with new hires and is now harmonizing business processes across our operations in Saudi, Kuwait, and Oman, leveraging SAP and Oracle systems.

Khalifa Sultan Al Suwaidi, Chairman of Agthia Group, commented: “Agthia’s results for the first six months of the year further demonstrate the management’s ability to successfully consolidate value-accretive businesses and leverage synergies while maintaining a profitable core, across all economic cycles. I am confident that Agthia will continue to create value for all stakeholders as it progresses its strategy to become a leading food and beverage company in the MENA region and beyond”.

Alan Smith, Group Chief Executive Officer, commented: “There is much to be proud of over the past six months, from innovative product launches into new, scalable markets and strengthening Agthia’s Board and Leadership Team, to launching a bespoke venture capital fund that will futureproof our research and development capabilities and offer additional avenues for profitable growth. The efficiencies we continue to generate across our portfolio are enabling us to accelerate investment in capacity, sustainability, and digital excellence, while maintaining a robust balance sheet. An economic backdrop characterized by inflationary headwinds and currency volatility has required us to remain disciplined and agile in our execution, and I am grateful for the continued support and dedication of all our colleagues across the Group in achieving this strong first half performance”.

The Company’s H1 2023 results are available on the Company’s website www.agthia.com and at www.adx.ae.