By Gavin Gibbon
CEO Alan Smith revealed ecommerce activity doubled during lockdown period
Abu Dhabi-based food and beverage maker Agthia Group PJSC is shifting into online sales and home deliveries to help offset the coronavirus pandemic’s impact on its business.
Chief executive officer Alan Smith told Arabian Business that the ecommerce side of the company increased 100 percent during the lockdown period, although it wasn’t enough to prevent a 48 percent plunge in net income in the first half of the year.
“What Covid has taught people is that the ecommerce sector, which historically has been about two percent of food retial sales in the UAE, from our perspective, we’ve seen a growth in the last few months of over 100 percent in terms of demand,” said Smith, who took over as CEO on July 7.
The group saw its net profit slip to AED42 million ($11.4m) from AED83m ($22.6m) in H1 last year, although it did record a 2.6 percent increase in revenues over the period.
The drop in profit was attributed to lower sales of bottled water in the UAE and Saudi Arabia; bad debt provisioning against longer collection days in international markets; and extra manufacturing and logistics costs to keep the business running through the pandemic.
Smith said that while the water side of the business, which includes Al Ain Water, Al Bayan, and Alpin, struggled due to movement restrictions and the closure of hotels and restaurants, the company’s 5-gallon home and office distribution (HOD) business, grew by eight percent year-on-year as a result of increased demand, particularly from homes.
He said: “We’ve seen our food business do relatively well; on the other side, our water business, because of the channel impacts and because of the lockdown on the eateries, the hotels, the restaurant side has obviously taken a bit of an impact.”
The group’s food category, meanwhile, saw net revenue increase by 27 percent.
The flour segment in the agri business recorded AED265m ($72.2m) in revenue, a 29 percent growth in top-line versus last year on higher domestic volume, export sales and wheat trading.
“I think in terms of the flour side of the business, there’s been a lot more in terms of cooking more at home. Overall we’ve been able to increase our food business,” added Smith.