Financial Performance of Masafi Company - Case Study Example

The paper "Financial Performance of Masafi Company" is a perfect example of a case study on finance and accounting. Masafi company had a stunning increase in its net profit in the year 2008 as compared to 2007 representing a 36 percent increase in its net profit with a revenue of AED378 million signifying a 35% rise from the previous year. This incredible financial progress in 2008 was however realized in difficulties as the inflation rate was high due to increased operational expenses but the company’s strategies were good enough to survive the tough economic times as inventions and divergence made them be more competitive.

The company had a 55 percent increase in sales of tissues, a 21 percent rise in juices, and a 16 percent growth in the aquatic sector.  These upward movements have to Masafi acquiring a 40% market share and 84 percent market segment of the flavored drinks making it almost the only bottler’s in the market. The achievements can be attributed to good management, an increase in communications revolutions, commanding a big share of the market-leading to rise in revenues hence high profits and exerting monopoly power in the bottler's industry as they experience almost no competition within the industry hence higher yields.

The demand for bottled water rose over the period. It increased by 9.1 percent in 2009 and a further rise of 5.1 percent. The growth may be attributed to the enlargement of the market share in the UAE which acts as the bigger market for water products and a rise in taste by the consumers leading to higher sales volume for the company. However, growth increased at a decreasing rate. This was a result of the change of government policy and the need to conserve scarce natural resources. This made the company’s production cost rise as they explore other new alternatives to get the inputs. Due to all these challenges, conversely, the prospect remains positive as the company is planning to diversify its production commodities. 

In 2012 Masafi Firm had a net profit of about 1.58 billion which still displayed a rise as compared to the earlier year (2011). Taking into consideration of the Masafi tissue, it saw its value share halves in 2012 which had resulted in the decline in the distribution and products imports volume, they had to reconsider their position in this area ( tissue products) as they had enjoyed a monopoly in the market for the earlier years resulting to increased net profits, that is from 2007-2008 and may lead to a decline in the company’s profits in the coming years as a result of the entrance of other firms in the market.