Agthia boss not concerned about rising utility costs

 The owner of brands such as Al Ain, Yoplait and Capri Sun, is pushing ahead with its plans of “aggressive expansion” throughout the region, despite an increase in operating costs, according to acting Chief Executive Officer of Agthia Tariq Al Wahedi.

“We have just opened a new plant in Saudi, and we have a plant in Kuwait under construction. We also have operations in Oman. We want to be a regional company, with local operations in every country in the GCC,” he said at Gulfood, the food and beverage event taking place in Dubai, on Sunday.

“We will continue the same plan of aggressive expansion that we have followed for the last two years.”

Agthia is a public company, owned 57 per cent by the government of Abu Dhabi, with the remainder floated on the Abu Dhabi Stock Exchange (ADX).

The UAE-based company has an agricultural arm, in addition to its consumer business

“We think it’s a great market to be expanding in,” Al Wahedi said, adding that he felt the market had bottomed out and was on the way back up.

He did, however, warn of the risks of delayed effects, stating that in the food industry “there is always a lag time.”

When asked about the challenges facing his industry, he stated that “everyone knows prices are going up,” referring to the increasing costs of utilities.

“That sets you back from a costing perspective.”

The price of water and electricity increased in Abu Dhabi on January 1, 2017, with agricultural customers now paying a rate of Dh3.13 per 1,000 litres while supply via tanker filling stations will charge Dh4 per 1,000 litres.

The tariff hike comes amid a low oil price environment that is forcing governments throughout the region to cut subsidies.

Saudi Arabia also announced an increase in the price of petrol and electricity, after reporting an $87 billion (Dh319 billion) deficit in its 2016 budget.

In order to mitigate these increased operating costs, Al Wahedi said that it all came down to efficiency.

“There are new technologies that are coming out now that allow you to have a more efficient consumption of utilities, and that’s what we’re going to do.”

“We try not to follow commodity trends, but instead distinguish ourselves from our competitors via innovation,” he added.

Despite that, the senior executive did go on to state that the health and wellness sector would be the most important for his company this year, noting its growing popularity in the UAE.

“We have many projects in the pipeline that will be founded in health and wellness.”

Agthia reported a net profit of Dh254 million for 2016, a 10 per cent increase on 2015, buoyed by higher sales and lower commodity costs.

In its filing of financial results it described Al Ain bottled water as the company’s “engine of growth.

source : gulfnews