Agthia, the food and beverage company based in Abu Dhabi, is bullish about growth in Saudi Arabia and aims to expand further in the Arab world’s largest economy.
The company, which announced a greenfield investment of Dh90 million ($24.5m) to set up a new manufacturing unit in the kingdom earlier this year, is “looking for new opportunities” to further grow its business in the country, Alan Smith, chief executive of Agthia Group, told The National.
“Saudi Arabia continues to be a market of interest. That’s why we are investing in our new facility … we will continue to look for opportunities there,” Mr Smith said.
The kingdom's economy is continuing to "strengthen and is moving in the right direction", he added.
Saudi Arabia's economy recovered strongly from the impact of the coronavirus pandemic on the back of higher oil prices.
The kingdom’s economy expanded by 11.8 per cent in the second quarter of the year, according to initial estimates by the General Authority for Statistics.
A number of companies are boosting their investments in the kingdom. Saudi Arabia signed investment deals worth $925m in the second quarter of 2022, according to the latest data from the Ministry of Investment.
“We are positive about Saudi Arabia ... for us, it is not only the growth of the economy but also the opportunity to be a bigger player in terms of market share in Saudi ... [that] is what attracts us," Mr Smith said.
Agthia, which is owned by Abu Dhabi’s holding company ADQ, manufactures, distributes and markets a range of food and beverage products, including popular regional brands such as Al Ain Water and Al Foah dates.
Apart from the UAE and Saudi Arabia, the company is also active in Kuwait, Oman, Egypt, Turkey and Jordan.
The company reported a 73.8 per cent jump in its first-half profit to Dh118.1m as revenue grew to Dh2 billion on the back of continuing consolidation of strategic acquisitions made in the last year.
Agthia’s second-half revenue is also forecast to be about Dh2bn as it continues with its expansion plans, Mr Smith said.
“We are quite happy with the numbers that are coming through and they are an indication of our diversification strategy ... Fifty per cent of our revenue is coming from the UAE and 50 per cent from the international market," he said.
"We are about Dh2bn in revenue year to date ... probably we will be looking at similar revenue for the rest of the year — that’s how we see the business."
The company made five strategic acquisitions throughout the past year, including date processing and packaging company Al Foah, Kuwait’s Al Faysal Bakery and Sweets, Jordan’s Nabil Foods, Egypt-based meat processor Ismailia Investments — also known as Atyab — and snacks maker BMB Group.
Last month, it also bought a 60 per cent stake in Egypt's Auf Group, a healthy snacks and coffee manufacturer, to expand its operations in the Arab world’s most populous country.
“From an M&A [mergers and acquisitions] perspective, we continue to look at interesting opportunities that are out in the market. We still talk about Mena [the Middle East and North Africa] and Pakistan and again it should tick all boxes in terms of criteria which we have set out in terms of being accretive and fitting in the market," Mr Smith said.
The company is transforming its operations under a new five-year growth strategy as part of efforts to become the region's top food and beverage company by 2025.
The strategy is already working with revenue in the first half of the year matching the full-year revenue two years ago, Mr Smith said.
"So already significant progress [is being made] in that regard," he said. "We are doing a lot of things that we said we are going to do.
"We have obviously been navigating through what has been a volatile period from a supply chain perspective and inflationary perspective. Given all those dynamics, it goes to show that Agthia is building a model that is sustainable."
On inflation, Mr Smith said it will probably peak in the third and fourth quarters of the year, and "then next year, we could see the market starting to stabilise".
Source: The National
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