Associated British Foods has reported a 1% increase in adjusted operating profit to £497 million for the 24 weeks ended 1 March 2014, on group revenues that were 2% lower than last year at £6.2 billion. At constant currency, first half profits were 2% ahead and when further adjusted for businesses disposed of last year, were 3% higher. Revenues from continuing operations at constant currency were 1% ahead.
Strong performances from the Primark retail business and the Grocery division and an encouraging improvement at Ingredients more than offset a substantially lower profit from Sugar. Together with the benefit of lower interest and tax charges, adjusted earnings per share increased by 10%.
George Weston, chief executive of Associated British Foods, says: “The group as a whole has delivered a very resilient operational and financial result at a challenging time of transition for our European sugar business.”
At AB Sugar, agricultural performance was much improved, many factories achieved record results and cost savings were successfully delivered by a continuous improvement and overhead reduction programme. The profit reduction was driven by low world sugar prices and a rapid change in the EU sugar market ahead of regime reform in 2017. According to ABF, its EU sugar operations are well placed to succeed in the post-reform environment with highly efficient and well-invested factories. Africa continues to offer low-cost production and growth opportunities, and profitability inChinawill improve as ABF’s investment in agricultural development yields sustainable benefit.
Grocery benefited from much-improved profitability at George Weston Foods in Australia and a stronger performance from the oils business at ACH in North America. Twinings Ovaltine achieved further growth but profit from the UK Grocery businesses was held back by lower sugar prices and volumes at Silver Spoon.
With the benefit of no restructuring costs and an improved performance from yeast and bakery ingredients, profit at Ingredients rallied and, whilst there is still a long way to go to restore margins in this business to acceptable levels, good progress is being made.
