ABF Reports More Than Doubling of Profits Helped by Sugar and Grocery Businesses
20 Apr 2016 --- Associated British Foods has reported a more than doubling in first half-year profits, with profits up at its grocery and sugar businesses.
Pre-tax profits at ABF jumped from £213 million ($306 million) to £457 million ($657 million) year-on year but sales were down two percent to £6.1 billion ($8.8 billion) in the 24 weeks ending February 27 2016.
At ABF’s grocery business, its second biggest business division behind its supermarket chain Primark, sales were slightly down from £1.58 billion ($2.3 billion) to £1.52 billion ($2.2 billion) while profits nudged up from £128 million ($184 million) to £130 million ($187 million).
Sales at ABF’s sugar business dropped 9 percent to £843 million ($1.2 billion) in the period.
However, when currency fluctuations were stripped out, revenues were up three percent with an operating profits of £6 million ($8.7 million), compared to a £3 million ($4.3 million) loss the year before.
Across grocery, Twinings Ovaltine performed well in the UK, Italy, the US and Australia, helped by marketing campaigns.
The brand also performed well in developing markets but tough economic conditions led to disappointing sales in Nigeria.
The bakery market remains tough, with prices stagnating at their lowest levels of eight years.
ABF’s flagship bread brand Kingsmill, though, saw its market share grow, and helped by strong consumer demand for alternative bakery products.
Its Dorset Cereals brand, now launched in Australia, continued to perform well while its other cereal brand Jordan grew sales in Australia, Canada and France.
Marketing spend helped Indian and Oriental brands Patak and Blue Dragon maintain their leading positions in the market.
Operating profit was sustained in the US, despite a competitive market for vegetable oils.
Further advertising support behind its cooking oil brand Mazola promoting its health benefits.
ABF’ sugar business, which runs the Silver Spoon brand, showed signs of improvement, rebounding after years of suffering from falling commodity prices.
Revenues from sugar rose three percent at constant exchange rates.
ABF has reached an agreement to buy out the rest of its stake in Africa largest sugar producer, Illovo, for £260 million, which it says will lead to cost-savings.
