ABF posts growth ahead of end of year results

Kingsmill owner ABF has announced a rise in operating profits

Kingsmill owner Associated British Foods’s (ABF’s) operating profits will be ahead of last year, according to its trading update released today (September 12).

It also announced a rise in its operating profits across its grocery and sugar divisions in its pre-close trading update for the 53 weeks to September 17.

The company cited the current exchange rate of the pound as having both positive and negative effects, including a benefit on its subsidiary British Sugar’s margins.

Grocery revenues would be marginally ahead of last year with a good underlying performance, while revenue and profit would benefit from favourable currency translation, it said.

ABF attributed the growth of its grocery division to a strong effort by its tea company Twining Ovaline, which featured a relaunch of its Twinings UK brand.

Low retail sugar prices

The success of Kingsmill Sandwich Thins led to the creation of a second production line, while a Silver Spoon saw pressure on its margins from low retail sugar prices.

ABF saw its sugar division strengthen thanks to an increase in world sugar prices and a reduction in EU stock levels, which benefited its Spanish business.

However, it would not see the results of this until the end of the next financial year, due to its sugar contracts being agreed on an annual basis.

All of ABF’s sugar businesses have delivered substantial cost reductions through a combination of continuous improvement, business transformation, capital expenditure and procurement activities, it claimed.

Selling its sugar cane business

ABF also announced it would be selling its sugar cane business in southern China to a consortium led by Nanning Sugar.

Meanwhile, ABF’s ingredients’ revenues were expected to be ahead of last year and operating profit would be ahead with a further improvement in margin.

AB Mauri – its bakery ingredients and yeast business – delivered a third year of significant profit recovery from all regions.

The company said a key driver of the development of the business had been the recent investment in the US and UK Centres of Excellence and the expansion of the bakery ingredients research and development centre in the Netherlands which will be completed next year. 

 

Analysts comment – Connor Campbell of www.spreadex.com

Suffering more than most this Monday, Associated British Foods fell more than 6% as it warned that, while it may be enjoying a weakened sterling at the moment, the pound’s low price could impact UK profit margins in the new financial year. This comment, combined with a the prospect of a 2% fall in full year sales from Primark, clearly upset investors, explaining their sharply negative reaction to Monday morning’s statement.

Related News

Hilton Food Group's operating profits rose by 25.7%

Hilton Food Group’s profits rise 25%

Chaucer boss Andy Ducker said the company's growth was fuelled by expansion into the US and existing markets

US expansion boosts revenues at Chaucer

ABF posts revenue and profit growth

Profits rise for ABF after Brexit vote

Unexploded bombs were found the Bury St Edmunds sugar factory

Food factory gets bomb surprise in supplier’s delivery

Real Good Food posts sales growth despite a volatile market

Real Good Food sales grow despite volatile market

Associated British Foods expected revenue to increase across its Grocery, Ingredients and Sugar divisions

ABF grocery, sugar and ingredients revenue rises

ABF posts sales and profit growth in its interim results

ABF sees £171M half-year profits boost

Morrisons, Dairy Crest and ABF headed for positive trading updates this month?

Good news on the way for Morrisons: Shore Capital

The exporters' association fears a euro backlash against British products

Brexit risks euro backlash against British goods

The British frozen food market is value at more than £8bn

British frozen food market worth a cool £8bn

The Kingsmill manufacturer planned to cut 53 jobs at its Saltney distribution depot

Allied Bakeries to close depot with loss of 53 jobs

‘Putting more British food on more British plates,’ was Kendall’s recommendation

‘Put more British food on British plates’: AHDB boss

Nugent: ‘We collaborated with other people in our industry and through our trade association’

Pork processor: collaboration has reduced audits

Related Products

See more related products

Submit a comment

Your comment has been saved

Post a comment

Please note that any information that you supply is protected by our Privacy and Cookie Policy. Access to all documents and request for further information are available to all users at no costs, In order to provide you with this free service, William Reed Business Media SAS does share your information with companies that have content on this site. When you access a document or request further information from this site, your information maybe shared with the owners of that document or information.