ABF Reports Profits Up Despite Challenging Outlook For Sugar

23 Apr 2014 --- Associated British Foods (ABF) reported a 1% rise in profits for the first half of the year, with strong sales for its Primark clothing business and encouraging results for its grocery operations offsetting a steep drop in its sugar business. The international food, ingredients and retail group made an underlying profit of £497m in the six months to 1 March.

Lower sugar prices will result in a substantial reduction in profit from sugar for the full 2014 year, the company said. Operating profit in sugar dropped to £64m from last year’s £162m due to lower sugar prices.

“The group as a whole has delivered a very resilient operation and financial result at a challenging time of transition for our European sugar business,” said chief executive, George Weston.

The company noted also that the impact for sugar in the EU was also exacerbated by an intensification of competition ahead of quota abolition in 2017. “Our sugar operations are well invested with highly efficient and cost-competitive plants, and in Europe are well placed to succeed in the post-reform environment.”

The recovery in Grocery profit seen in the second half of last year continued with a substantial improvement from George Weston Foods in Australia and a higher profit from ACH. Twinings Ovaltine has consistently delivered sales and profit growth over a number of years and has done so again this period, the company said.

The overall results are in line with analyst forecasts, the company confirmed.  “When combined with improvements in grocery and ingredients and a lower interest charge, we continue to expect adjusted earnings per share for the financial year to be similar to 2013,” it said.

Shares in the company jumped 9.7% today.