ABF Delivers Adjusted Earnings Growth of 8%

Weston reported that last year saw a step change in the group’s profitability which makes this year’s first half revenue growth of 9% and an increase of 5% in adjusted operating profit all the more creditable.

4/27/2011 --- Associated British Foods has reported that group revenue was up 9% to £5,207m in the first of 2011, with adjusted operating profit up 5% at £390m. Adjusted profit before tax was up 7% to £353m.

George Weston, Chief Executive of Associated British Foods, said: “The breadth, diversity and resilience of our businesses have enabled the group to deliver good growth. We have made further substantial capital investment for the longer-term development of the group.”

Weston reported that last year saw a step change in the group’s profitability which makes this year’s first half revenue growth of 9% and an increase of 5% in adjusted operating profit all the more creditable. Net financing costs and the underlying tax rate were both in line with last year. Adjusted earnings were 8% higher at 32.9p per share.

“Sugar profits in the first half were higher than last year with substantial improvement in the operations in Spain and China. In my statement in last year’s interim report I commented on the relatively small impact that world sugar price volatility typically had on our sugar businesses. Since then world prices for sugar have risen to their highest level for 30 years and well above the level in the EU. The reform of the EU sugar regime reduced European beet sugar production below the level of domestic consumption. This created a deficit market that requires imports to make up the shortfall. Higher world prices have made other markets more attractive than the EU as a destination for sugar and have increased the cost of sugar imported by the EU. This in turn has started to increase the prices achieved by European producers,” Weston said.

The UK sugar beet crop was badly damaged by the warm weather in January which followed a prolonged exceptionally cold period in December. “I am pleased to report that planting for the new season has been completed ahead of schedule with acreage in line with expectation,” Weston said.

Primark delivered excellent revenue growth of 13% at constant currency in the half year driven by a strong programme of new store openings and a like-for-like sales increase of 3%. “We are determined that Primark will retain its position as price leader and margins in the second half will be lower than previously planned. As already highlighted, the higher cost of UK sugar production this year and the cost of third party sugar purchases will also affect second half profitability. We continue to expect good revenue growth for the full year although adjusted earnings are now expected to be similar to last year’s very strong result,” he concluded.