Agthia Group PJSC (“Agthia” or “the Group”), one of the region’s leading regional food and beverage companies, announced today its results for the three-month period ending 31 March 2024. Agthia delivered strong performance during Q1 2024, on track to meet its full-year 2024 guidance. The Group’s profitable growth across the Snacking, Water & Food, and Agri-Business segments, combined with leveraging group-wide efficiencies, resulted in both Group EBITDA and Group net profit growing faster than revenue.
Financial highlights
- Group net revenue increased 22.6% year-on-year to AED 1.45 billion (5% growth from volume and 5.1% from pricing), with strong performance across all segments, despite challenging global macroeconomic conditions. Group revenue, adjusted for the impact of currency devaluation in Egypt (AED -42.5 million), increased by 26.2% year-on-year. Q1 2024 revenue was positively impacted by AED 120 million in one-off commodity trading sales in the Agri-Business. Excluding this one-off, Group net revenue increased by 12.4% year-on-year.
- Snacking: Revenue rose 17.7% year-on-year, driven by robust growth across the Group’s snacking portfolio. This increase was led by the strong performance of the coffee segment, where Abu Auf continued to gain value share in the local market for premium-branded coffee in Egypt. The growth was further supported by the ongoing organic expansion of the retail chain, as Abu Auf opened 27 new stores during the quarter. Additionally, the dates category continued to deliver strong innovations across mid and high-value ranges, along with an expansion in date varieties and significant value growth across retail channels in the UAE and internationally (e.g. India, South Africa, and Bangladesh).
- Water & Food: Revenue increased 3.5% year-on-year, with Al Ain bottled water retaining its market leadership position. This reflects a 5.9% year-on-year increase in UAE water revenue growth, fueled by premiumization and innovation, including a significant growth of glass bottled water sales. Additionally, continuous improvements in customer service quality within the Home and Office Delivery (HOD) business led to a strong growth of 8.6% during the quarter. International business revenue also increased by 8.3% year-on-year, with notable performance in Kuwait and Oman.
- Protein & Frozen: Revenue grew 15.9% year-on-year, marking the first time the segment has delivered positive revenue growth in reported currency since Q3 2022, showcasing continued resilience amid the challenging macro and consumer environment, which included another round of devaluation of the EGP. Excluding the impact of currency devaluation, revenue grew 24.5% year-on-year during Q1 2024.
- Agri-Business: Revenue increased 50.6% year-on-year, mainly driven by strong volume growth across Flour and Feed segments, along with one-off commodity trading sales (+10.5% excluding the one-off). This was driven by consistency in quality and product performance, as well as excellent in-market execution in Agthia’s Flour business. Additionally, the strong performance in Feed reflected good open market growth, participation in Abu Dhabi Agriculture and Food Safety Authority’s (ADAFSA) compound feed program and related new product development.
- EBITDA[1] growth was ahead of revenue, up 23.4% year-on-year to AED 232.6 million (+28.8% excluding currency headwind), reflecting strong growth in Snacking, Water & Food, and Agri-Business profitability, combined with a continued focus on profit protection in Egypt and group-wide efficiency generation.
- Snacking: EBITDA growth of 42.7% reflected strong pricing, favorable mix effects in both domestic and international date markets, as well as strong profitability expansion in Abu Auf, which was supported by strong innovation, premiumization, and strategic buying initiatives, leading to Snacking EBITDA margin expansion of 430 bps year-on-year.
- Protein & Frozen: EBITDA grew 9.9% year-on-year, despite input cost volatility in Egypt and external challenges affecting Jordan. While currency headwinds continue to overshadow the strong underlying performance in Protein (reported EBITDA margin declined by 63bps year-on-year), Agthia maintained its focus on productivity enhancement and disciplined management of costs throughout the quarter (excluding the impact of EGP devaluation EBITDA margin was broadly flat year-on-year) and has identified a number of incremental efficiency drivers which should help offset the negative impact of further EGP devaluation.
- Water & Food: A combination of a favorable mix towards high-margin premium products, further cost efficiencies across the board, and a more benign commodity environment resulted in EBITDA growth of 18.8% year-on-year and EBITDA margin expansion of 213bps. UAE bottled water (EBITDA +28.3% year-on-year) emerged as the top performer within the segment.
- Agri-Business: EBITDA growth of 56.3% year-on-year outpaced revenue growth, driven by a favorable shift in product mix, improved commodity market conditions, higher facility utilization rates, and enhanced cost efficiencies.
- Group net profit grew 32.0% year-on-year to AED 127.6 million. Group net profit margin expanded by 63bps to stand at 8.8%, notwithstanding FX headwinds and the introduction of income tax in the UAE.
- Strong balance sheet: Agthia’s balance sheet remained robust with cash and equivalents of AED 0.5 billion and liquidity of AED 2.4 billion. The Group’s net debt to EBITDA ratio of 1.3x (net debt of AED 1.0 billion) remained flat relative to December 2023.
Strategic highlights
Strong progress throughout the year in expanding the Group’s capabilities and efficiencies to future proof the organization.
- Strengthening the Leadership Team: Agthia has further strengthened its leadership team through the following external appointments as the Group seeks further growth and expansion over the coming period:
- Rafik Lawendy was appointed as Chief Growth Officer, bringing strong marketing, strategic and operational experience across a range of consumer-facing businesses, having spent over 20 years of marketing and general management expertise in the food and beverage sector split between the Middle East region, and global and US-focused roles.
- Hala Hobeiche Katounas was appointed as Senior Vice President of M&A, bring over 20 years of investment experience in the Middle East, North Africa, Europe, and Asia, encompassing private equity, real estate, and venture capital.
Leveraging Agthia’s Egyptian platform: Agthia continued to strengthen its export focused resource during the quarter, with new Food Service volumes in both regional and international markets underpinning growth in export revenue from Egypt reaching AED 24.4 million in Q1 2024. Abu Auf rapidly expanded its retail footprint, with the opening of 27 new stores during the quarter, as well as launched several new innovative SKUs into UAE and Saudi channels
[1] Restatement of Q1 2023 segment numbers: Comparable period reported segment EBITDA figures have been restated for head office cross-charge in accordance with the new transfer pricing policy effective Q1 2024 to comply with the UAE’s new corporate tax law. The objective is to ensure LFL comparability of reported segment performance. The restatement solely pertains to the allocation methodology and does not impact the total financial performance of the Group.
