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Agthia and Silal officials signing the MoU

Agthia and Silal officials signing the MoU



New acquisition boosts Agthia position in snacking

The region’s leading food and beverage firm’s new strategy has been effective in creating a more resilient business and is in line with its 2025 plan to become an F&B leader in the Mena region

01 January 2022

Agthia Group, one of the region’s leading food and beverage (F&B) companies, has strengthened its position in the fast-growing Middle East food and beverages industry, with the completion of its strategic acquisition of a 100 per cent stake in BMB Group, a leading regional healthy snacks and food company with a growing global footprint.

The acquisition bolsters Agthia’s position in the fast-growing snacking and healthy food segment, building on its acquisition of date company Al Foah and Al Faysal bakery in January.

For nearly 15 years, BMB has been pioneering confectionery and healthy food products with over 2,000 SKUs in more than 23 countries worldwide. The list includes UAE, Saudi Arabia, and the US, where BMB supplies some of the biggest retailers such as Walmart, Sam’s Club and Costco.

On the strategic acquisition, Agthia Group Chairman Khalifa Sultan Al Suwaidi said: “This transaction supports our 2025 growth strategy focused on the acquisition, integration and scaling of new businesses in value-add categories. The acquisition of BMB will create immediate value accretion for our shareholders, with significant growth prospects across Agthia’s product portfolio, geographical footprint, human capital and R&D capabilities.”

Smith: aiming a leadership slot

Smith: aiming a leadership slot

CEO Alan Smith said: “This is an exciting and significant acquisition that will expand our footprint in the confectionery and healthy snacking verticals, delivering immediate growth through established brands distributed across key regional and global markets.”

“Together we will take these brands to new markets, as well as utilise BMB’s distribution network to widen the reach of Agthia’s product portfolio in exciting markets such as the United States and Canada,” noted Smith.

Agthia has acquired 100 per cent of BMB from its founders and Co-CEOs Bilal Ballout and Mohamad Khachab, and an investment vehicle controlled by The Panarae Partnership, a privately held holding company.

“In the longer term, this acquisition will see us at the forefront of new consumer trends. With our shared passion for innovation, BMB’s experience and our strong balance sheet, we will become market leaders in healthy snacking and venture into exciting verticals such as plant-based foods,” he added.

Dubbing it as an exciting time for BMB, Ballout and Khachab, said through its partnership with Agthia, the group will scale up business across the snacking and healthy food segment and develop and invest in foods of the future.

BMB began its journey in 2007 as a small warehouse in Sharjah. Today it manufactures and distributes a wide variety of chocolate, Mediterranean sweets, bakery ingredients and healthy snacks and food for its own brands and partners.

It has two manufacturing facilities stretching over a combined total of 150,000 sq ft area in its headquarters Dubai. With nearly 1,000 staff, BMB's portfolio includes popular confectionery and healthy food brands such as Asateer, Al Qamar, Freakin’ Healthy and Benoit.

 “Our focus will continue to be on product innovation and expanding our markets as we continue to evolve into a truly global foods conglomerate,” he added.

 

Al Suwaidi: pursuing a modular approach

Al Suwaidi: pursuing a modular approach

MoU with Silal

Meanwhile, the region’s leading food and beverage firm signed a Memorandum of Understanding (MoU) with Silal, Abu Dhabi’s fresh produce and agritech company, to construct 10 grain silos by the end of 2022.

These will be located at Zayed Port in Abu Dhabi, with a total capacity of 200K MT, and store multiple varieties of critical grains, such as wheat, barley, and corn.

The silos, which are among the largest in the UAE with significant volume and capacity, will be considered a landmark project to support and enhance the country’s strategic food reserves programme.

Commenting on the MoU, Eng. Jamal Salem Al Dhaheri, CEO of Silal, said: “The establishment of the silos is crucial for the UAE to ensure sufficient infrastructure is available to support the nation’s goal of achieving food sustainability through the availability of key food items at all times. We are delighted to collaborate with Agthia to increase strategic food reserves within the emirate of Abu Dhabi and the UAE.”

“The silos will play a vital role in food accessibility, and we look forward to working with our progressive partners to enable sustainable and forward-thinking practices. This MoU adheres to Silal’s ethos and is in line with achieving the UAE’s commitment to the United Nations Sustainable Development Goals (SDGs).”

“Agthia remains strategically aligned with the UAE’s vision of the country’s economic, social and environmental success. Furthermore, we have been a driving force in the ESG sustainability efforts across our business operations, as per global best practices related to the food and beverage industry. This partnership represents another step in that direction,” said Smith.

Under the MoU, Silal will lead the project execution while being supported with consulting counsel by Agthia, which will lend support for the overall building of the silos. Furthermore, Agthia will manage the silos’ operation upon the project completion and provide technical consultancy services to support the project through the construction phase.

Established to diversify the sources of food produce, Silal has a firm commitment towards the vision of the UAE to increase the capacity for strategic food reserves (such as in grain, rice, legumes, edible oils, sugar, and frozen foods).

 

Net Revenue Rises

Meanwhile, continuing strong growth momentum, Agthia Group posted year on year net revenue rise of 34 per cent to AED2.1 billion ($570 million) during the first nine months of 2021.

Group net revenue for the third quarter rose 62 per cent to AED795 million. The group's net profit for the 9-month period came in at AED103 million, which is the net of M&A and business integration associated costs of AED31 million, compared to AED10 million during the same period last year.

Over the 9-month period of 2021, the company’s consumer business division almost doubled from the previous year, with revenues reaching AED1.4 billion. The division now encompasses 67 per cent of total group sales, which is 13 per cent higher contribution versus same period in 2020. Meanwhile, the protein segment contributed AED373 million over the same period.

On the snacking front, the business units recorded net revenues of AED334 million in top-line, with an improved profitability owing to favourable sales mix, cost optimisation initiatives and synergies.

Other food items, including dairy and trading items reported higher margins at the net income level, even though their sales of AED122 million in the first 9 months of 2021 was 15 per cent lower y-o-y compared to the same period in 2020.

The water & beverage division recorded slightly lower sales in 9M 2021, compared to the same period in the previous year, driven by the discontinuation of the beverages business since January 2021. Meanwhile, higher sales were recorded in the UAE bottled water category, in both Q2 and Q3 2021 versus respective periods last year on the back of higher volumes specifically in the food service channel post opening of hotels and restaurants. The group’s bottled water portfolio – Al Ain Water, Al Bayan, Voss and Alpin – sustained their market leadership in the UAE in both volume and value share at 26 per cent and 23 per cent, respectively.

The agri-business division revenues were down 4 per cent over the 9-month period in 2021, compared to the previous year, largely driven by a one-time World Food Programme order in Q1 2020 and lower wheat trading.

“Agthia’s new strategy has been effective in creating a more resilient business as evidenced by the strong financial results of the first nine months of 2021. Our growth has been skillfully supported by an institutionalised modular approach to integration of new units to our business – driven by seamless transitions, productivity and value creation – reiterating the three pillars of growth, efficiency and capability of Agthia’s 2025 Strategy to become an F&B leader in the Menap region. We expect to see continued robust activity over the remaining months of the year, providing further opportunity for us to demonstrate the durability of our results and increased market leadership,” said Al Suwaidi.

“Agthia continues to deliver positive performance with year-on-year growth, thanks to the teams’ commitment and focus on performance and delivery. Our portfolio transformation and integration are fully on track and have helped us unlock cost synergies and productivity with Al Foah. With Al Faysal, our priority has been to ensure that routine business remains undisturbed, while seizing new cross-distribution opportunities and unlocking potential commercial synergies. Meanwhile, the smooth consolidation of Nabil and Atyab has helped us create one integrated protein business unit, with significant synergies and value creation potential,” said Smith.  




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