The Business Year

Iqbal Hamza

UAE, ABU DHABI - Agriculture

Dairy Tale

CEO, Agthia

Bio

Iqbal Hamza joined Agthia as the Group CFO and Company Secretary mid 2006, and became the CEO of Agthia Group in October 2014. Prior to his appointment at Agthia, he was the Regional Finance Director of Gillette Russia, Republics and Baltics, based in Moscow. Before moving to Russia he was the Regional Finance Director for Middle East and Africa based in Dubai. He commenced his career in 1989 with The Gillette Company and has held various key senior financial positions during his 17-year career with Gillette. By profession he is a Chartered Accountant and a Chartered Corporate Secretary.

TBY talks to Iqbal Hamza, CEO of Agthia, on performance in its second year of operations, segment-specific strategies, and the broader outlook for economic growth.

How would you assess Agthia’s overall performance for the past year?

We are quite satisfied with our overall financial and business performance. We have continued to advance our strategy of driving profitable growth across our core businesses, implementing cost saving initiatives, diversifying and launching new products, expanding our distribution reach, enhancing the in-store presence, and at the same time addressing underperforming businesses. In addition, we also continue to enhance our manufacturing capabilities and remain focused on improving operating and cost efficiencies. Furthermore, the company’s business and financial fundamentals are strong with a solid balance sheet to support our expansion plans. Agthia recorded net sales of approximately $326 million for the first nine months of 2014, an increase of 9% over the same period in 2013. Our net profit stood at $41 million, which represented a 26% increase YoY.

To what do you attribute the 10% YoY increase in net sales within the consumer division, and what is your near-term focus in the water, beverages, food, and dairy segments moving forward?

The bottled water, beverage, and dairy segments are growing categories and provide us with opportunities to further strengthen our position by gaining market share, expanding distribution reach, strengthening in-store presence and enhancing our product offerings to consumers. In addition to this, there are M&A opportunities within these categories, which is part of our growth strategy.

How have the company’s recent expansion projects added value to Agthia, and what projects are currently underway?

We have been growing faster than the category in all our key businesses, and our overall sales CAGR over the last seven years has been 19%. In order to meet the increasing demand for our products we have set up our distribution center in Abu Dhabi and expanded our production capacity for bottled water, flour, and animal feed. In addition, we have invested in new categories, for example dairy and frozen baked products. We have plans to further expand production capacity of bottled water and feed, and set up a distribution center in Dubai. All these initiatives obviously have resulted in delivering strong sales and profit growth. As far as dairy and frozen baked products investments are concerned, these are new categories we have entered recently and will take some time to become profitable.

In light of Agthia’s second year of increasing total net sales, total volume, and total profit figures, what opportunities do you see for future growth in the industry?

All product categories that we compete in are growing. Our sales growth is ahead of the category growth and will further strengthen our market position. We expect growth in the food and beverage sectors in the UAE and wider GCC as the population and tourism grows. Consumers are becoming more health conscious, which in future will involve adjusting our strategy in line with change in consumer behaviors. Furthermore, we also expect some consolidation happening in the food industry in the years to come.

How have government initiatives promoting food security and domestic production impacted agri-business in the UAE?

The UAE government’s initiatives to promote food security and encourage domestic food production, has helped to create favorable conditions for the segment. Growth is mainly driven by poultry and large animal feed.

What is your outlook on continued economic growth in the region in 2015 and beyond?

Although regional economic growth uncertainty and the commodity market volatility suggest challenges, the company’s strong balance sheet along with a clear strategy to continue driving profitable growth across our core businesses, improving profitability, diversifying and launching new products, and expanding our distribution reach provides us with reason to remain optimistic on the company’s prospects for future revenue and profit growth. The focus will also be to capture the white spaces within our existing geographies, and at the same time evaluate expanding distribution in Egypt and entering the Saudi Arabian market.

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