Agthia Group P.J.S.C., one of UAE's top food & beverage coperations, stated in their 3rd quarter results that their animal feed and flour business sales growth had grown over 12% from the previous year to sales of Dhs563m. The increase in results were put down to pricing and a 4% volume increase.
Net profit for their animal feed and flour business has declined by 21% from the previous year though, due to the profit margin contraction of four percentage points caused by large growth in grain prices in addition to the fact the flour segment during the same period in the previous year profited from a slump in grain prices which outpaced the readjustment in market selling price subsequent in unexpected one-off higher profit margin.
Actions are currently being executed by the company in order to improve the profitability of this segment which among others include the production capacity expansion of existing flour & animal feed mills. This incremental capacity will replace the currently higher cost of outsourced volume. The flour mill expansion has been completed and the mill is running at installed capacity. The feed mill expansion is expected to reach the installed capacity by Q1, 2012. We expect the profitability of Flour & Feed business to improve starting Q4 2011, provided no major escalation in grain prices.
