Dubai: There will be more acquisitions from Abu Dhabi food and water company Agthia as part of a plan to expand into higher margin categories. As it did recently in Jordan, Egypt and Kuwait, it will focus on companies with “strong consumer brands that are market leaders”. The categories it is interested in are "snacks and proteins".
The aim is to emerge as a Middle East F&B leader by 2025. "The strategy will generate cost and revenue synergies as we integrate these businesses, through cross-selling opportunities and enhancing the Group’s regional brand portfolio,” said Alan Smith, Group CEO.
Agthia recorded a sharp decline in 2020 net profit, to Dh34.5 million (from Dh2.06 billion in revenues), from Dh137 million (from Dh2.04 billion). The sharpest decline was recorded in deliveries made to business customers, especially in the restaurant trade, following lockdown measures put up after COVID-19.
On whether there will be investments on new plants, whether in the UAE or outside, the CEO said: “We have never shied from investing in new capacity. For the immediate future, however, we don’t want to take on any new investment or depreciation costs.
“But we may look at partnerships, whether external manufacturing or external supplies. Our capex this year will focus on maintenance.”
Operational savings
Over the near term, Agthia is targeting cost savings of Dh200 million over the next five years through full integration of existing and acquired businesses. Non-scalable assets will be divested while suppliers and specifications will be streamlined. (The company had similar savings from the last four years.)
Apart from bringing in Al Foah, the dates brand, into its fold, Agthia bought stakes in Al Faysal Bakery & Sweets, Jordan’s Nabil Foods, and, last week, Ismailia Investments (Atyab), an Egyptian company that’s into frozen chicken and beef products. If the recent acquisitions were added, Agthia's revenues would be in the Dh3 billion plus range.
"We will continue to get leaner, protect our core businesses and ensure that our progress is agile and deliberately paced," said Smith. "The effective integration of new businesses and the decisions we make in the near-term will also benefit us in the long-term."
It will shed businesses that “we think that do not offer best value to shareholders, are not scalable, and not fit in with what we intend to buy in future. We need to grow where populations are, Pakistan will be a priority market, and so will Egypt and the others. The shift in aim is to accelerate inside the UAE to the region."
