UAE’s Agthia bullish on Saudi Arabia’s plans for further expansion, CEO says

AgathaThe Abu Dhabi-based food and beverage company is bullish on growth in Saudi Arabia and aims to expand further in the Arab world’s largest economy.

The company, which announced earlier this year to spend 90 million dirhams ($24.5 million) to build a new manufacturing unit in Saudi Arabia, is “looking for new opportunities” to further develop its operations in the country, chief executive officer Alan Smith of the Agthia Group, told National.

“Saudi Arabia remains an interesting market. That’s why we’re investing in new facilities … we’ll continue to look for opportunities there,” Mr Smith said.

He added that the Saudi economy was continuing to “strengthen and move in the right direction”.

Saudi Arabia’s economy recovered strongly from the impact of the coronavirus pandemic on the back of higher oil prices.

Saudi Arabia’s economy grew 11.8% in the second quarter of this year, preliminary data show estimate by the General Statistics Office.

Many companies are increasing their investments in Saudi Arabia. Saudi Arabia signed investment deals worth $925 million in the second quarter of 2022. The latest data from the Investment Department.

“We are positive about Saudi Arabia… For us, it’s not just economic growth, but an opportunity to be a bigger player in terms of Saudi market share… [that] is what attracts us,” Mr Smith said.

Agthia, owned by Abu Dhabi-based holding company ADQManufactures, distributes and sells a range of food and beverage products, including popular regional brands such as Al Ain Water and Al Foah dates.

In addition to the UAE and Saudi Arabia, the company has operations in Kuwait, Oman, Egypt, Turkey and Jordan.

The company reported a 73.8 percent rise in its first-half profit to AED118.1 million, with revenue rising to AED2 billion due to continued consolidation of strategic acquisitions made last year.

Mr Smith said that as Agthia continues its expansion plans, it is also expected to generate around AED2 billion in revenue in the second half of the year.

“We are very pleased with the upcoming numbers, which demonstrate our diversification strategy… 50% of our revenue is from the UAE and 50% from international markets,” he said.

“So far this year, our revenue is around AED2 billion … we may see similar revenue for the rest of the year – that’s how we see the business.”

The company has made five strategic acquisitions in the past year, including date processing and packaging company Al Foah, Kuwait’s Al Faysal Bakery and Sweets, Jordan’s Nabil Foods, Egypt’s meat processor Ismailia Investments (also known as Atyab) and snack makers BMB Group.

last month, it also bought A 60% stake in Egyptian healthy snack and coffee maker Auf Group to expand its presence in the Arab world’s most populous country.

“From M&A [mergers and acquisitions] From a perspective, we continue to focus on interesting opportunities in the market. We still talk about Mena [the Middle East and North Africa] and Pakistan, it should tick all the boxes according to the criteria we have set in terms of adding value to the market and adapting to the market,” Mr Smith said.

As part of efforts to become the region’s top food and beverage company by 2025, the company is transforming its business under a new five-year growth strategy.

Mr Smith said the strategy was already matching first-half revenue with full-year revenue two years ago.

“So significant progress has been made [is being made] In that regard,” he said. “We’re doing a lot of what we’ve said we’re going to do.

“We have clearly been going through a volatile period from a supply chain perspective and from an inflation perspective. Given all these dynamics, this shows that Agthia is building a sustainable model.”

On inflation, Mr Smith said it could peak in the third and fourth quarters of this year, “and then next year we could see the market start to stabilize”.

Updated: 08/09/2022 4:30am