UAE-based food and beverage company Agthia Group PJSC reported a nearly 35 percent year-on year (YOY) decrease in net profit at 137 million dirhams ($37 million) in 2019 while its revenues increased two percent year-on-year to 2.04 billion dirhams ($558 million), according to the company’s preliminary and unaudited results released on Sunday.

In a related press statement on Monday, the company, which is listed on the Abu Dhabi stock exchange, attributed the increase in revenues to “geographic expansion and product category diversification.”

Tariq Ahmed Al Wahedi, Agthia Group CEO, said the company continues to dominate the water segment in the UAE “despite aggressive competitive activity, price promotions, and changing consumer habits, which has added pressure to the bottled water category, yet came in favor of the growth in shipped volumes of our 5-gallon HOD business.”

He added that focus on cost optimization,  better agri-business profitability and one-time Turkey tax credit reduced the collated impact of the withdrawal of the remaining bakery channel subsidy, declining growth in bottled water category in UAE and bad debt provisioning against longer collection days in international markets.

The statement noted that the contribution of the consumer business to Agthia’s top-line growth increased to 56 percent in 2019 compared to 54 percent in 2018 driven by the company’s 5-gallon [water] Home and Office Delivery (HOD) business in the UAE, the food segment, and operations in Saudi Arabia and Kuwait.

According to the statement, Agthia’s flour business, part of its wider agri-business, overcame the challenge of subsidy removal with strong volume growth backed by ‘export sales, retail penetration, specifically in the Northern Emirates, as well as wheat trading.’

However, animal feed sales fell short due to lower grain sales and a decrease in demand from small-sized farms.

Agthia Group’s total assets stood at 3.1 billion dirhams ($844 million) in 2019, increasing marginally compared to the same time last year on IFRS 16 implementation.

(Writing by Anoop Menon anoop.menon@refinitiv.com, editing by Seban Scaria)

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