East Anglia: ABF on track for British Sugar profits sweetener
ASSOCIATED British Foods confirmed today that a strong performance from its British Sugar business had helped keep it on track to deliver half-year profits in line with expectations.
In a pre-close statement ahead of interim results due out on April 24, ABF said all areas of its business would deliver revenue growth for the six months to March 3 while group operating profits would also be ahead of last year’s first half, including “an exceptionally strong performance from sugar”.
Net financing costs would be higher due to increased indebtedness during the period, it warned, but earnings per share for the first half were still expected to be “a little ahead” of last year.
Profits from its sugar business would be “substantially ahead of last year”, driven by a strong increased at its UK operation, which has factories at Bury St Edmunds, Cantley and Wissington, both in Norfolk, and Newark in Nottinghamshire, accompanied by further improvements in Spain and a better performance from its African business Illovo.
With the UK beet procession campaign now virtually complete, sugar production was estimated to total 1.3million tonnes compared with just under 1.0million tonnes last year.
Profit in the UK in the first half would also benefit from the absence of the higher processing costs associated with the previous year’s harsh winter, a strong factory performance, high sugar content in the beet and higher prices, said ABF.
The group warned that strong competition had affected the margins of its Kingsmill bread arm Allied Bakeries but it said its Twinings and Ovaltine beverage brands had continued to perform “very well” and its UK grocery businesses, including Silver Spoon, Westmill Foods, Jordans, Ryvita and its Patgak’s Indian cuisine business AB World Foods, had traded in line with expectations, with profits similar to last year’s first half.
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And ABF added that its budget clothing retail business Primark had continued to defy the gloom elsewhere on the high street, with first half sales expected to be 15% up in total, assisted by the opening of nine new stores, and 2% ahead on a like-for-like basis.
ABF said Primark’s trading so far this year had been good, particularly in light of the economic climate, and the second half of the year would see the business benefit from lower input costs following a fall in cotton prices
The update comes a month after the group reported an “exceptional” Christmas for Primark, much improved on a sluggish autumn.