ABF Revenues Rise 10%, Boosted by Sugar Performance

Ingredients revenue was level with last year. Yeast and bakery ingredients revenues were close to last year across all regions. Good progress was made in bakery ingredients’ sales and margins.

25 Jan 2013 --- ABF has reported that group revenue for the first 16 weeks was 10% ahead of last year.

Sugar revenues were 12% ahead of last year. UK revenues in the period were ahead of last year with higher sales volumes compared with last year’s abnormally low level, and marginally higher sugar prices. Poor growing conditions during 2012 resulted in a lower beet yield and sugar content. As a consequence the UK campaign started later and will have lower factory throughputs to allow for a slower filtration process. Sugar production for the current year is estimated at 1.13 million tonnes compared with last year’s 1.32 million tonnes. Profit for the current year is expected to be lower than last year as a consequence of the lower production, higher beet cost and a weaker euro. The Vivergo bioethanol plant is now operational.

In Spain, heavy rains delayed planting in the south which is expected to reduce the size of the crop. We nevertheless expect to achieve overall quota sugar production volume in the current financial year but profit will be lower both because of a higher beet cost and this year’s sales including a higher proportion of lower-margin, refined cane sugar.

Illovo’s revenues benefited from higher production volumes in South Africa, with increased cane yields and sugar content, and with extended campaigns in Zambia and Swaziland. As a result we expect profit for the full year to be ahead of last year.

Sales volumes in China were unusually low last year and, as a result, this year’s revenues were ahead despite lower prices. Production campaigns are under way and a larger cane crop is expected to increase sugar production in the south ahead of last year. Sugar production in the north is expected to be in line with that achieved last year, with the new Zhangbei factory fully commissioned. For the full year, sugar profitability is expected to be well below last year as a result of much lower sugar prices.

Agriculture revenue was 3% ahead of last year driven by UK feed sales and AB Vista. Although sugar beet feed volumes in the period were ahead of last year, they are likely to be constrained for the rest of the year by the smaller UK beet crop. AB Vista’s feed enzyme business continued to make good progress particularly supported by the success of the recently launched Quantum Blue. China revenues were below last year with shortfalls resulting from lower demand for pig and poultry feed. Frontier traded at similar levels to last year.

Grocery revenue was level with last year. Twinings Ovaltine again performed well with good growth for tea in the UK and the US and for Ovaltine in its developing markets. Sales by the UK grocery businesses were in line with last year and Allied Bakeries recovered higher wheat costs through bread price increases. Sales declined at George Weston Foods in Australia but the business secured price increases for its Tip Top bread range at the end of the period. Progress was made in the Don KRC meat business with higher volumes and improved cost control. Revenue at ACH was level with last year. Grocery profit for the full year is expected to be ahead of last year benefiting from the non-recurrence of restructuring costs in George Weston Foods and Allied Bakeries.

Ingredients revenue was level with last year. Yeast and bakery ingredients revenues were close to last year across all regions. Good progress was made in bakery ingredients’ sales and margins. In China, yeast quality and productivity was improved and there was some reduction in molasses costs although the market remains competitive. The new yeast manufacturing facility in Mexico is currently being commissioned with first sales expected in the spring. At ABF Ingredients, sales of extruded grain products were well ahead of last year and protein and lactose prices remained strong.

Retail sales at Primark were above expectations, 25% ahead of the same period last year and 27% ahead at constant currency. This was driven by very strong like-for-like sales growth, a substantial increase in retail selling space and superior sales densities in the larger new stores. Like-for-like growth benefited from comparison with weak sales during the unseasonably warm autumn of 2011 and good trading over the Christmas period.