East Anglia: ABF reports reduced annual production for British Sugar and Primark drives increase in group profits
Silver Spoon sugar, Twinings tea and Kingsmill bread owner Associated British Foods today reported a 13% increasr in pre-tax profit, driven by a “remarkable” year for its Primark budget clothing retail chain.
In contrast with figures today from upmarket rival Marks & Spencer, Primark grew sales by 22% to £4.3billion in the year to September 30.
The figure was boosted by the opening of additional store space but sales were also 5% ahead on a like-for-like basis, and Primark’s annual operating profit grew by 44% to £514million.
Operatiing profits across the ABF were 10% up on the previous year at £1.185bn, with the pre-tax total coming in at £1.096bn. Total revenues were 9% up, at £13.3bn.
ABF’s sugar business, which includes UK beet processor British Sugar, saw operating profit fall by 15% to £435m ? following a record haul of £510m the previous year ? on revenue broadly flat at £2.677bn.
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ABF said this year’s figures were in line with management expectations, with British Sugar producing 1.15m tonnes of sugar, down on the previous year’s 1.32 million tonnes as a result of poor growing conditions during 2012 which led to lower beet yields and sugar recovery.
However, sugar prices generally remained strong, consolidating the impact of the previous year’s year’s price increases.
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“Looking forward to 2013-14, crop yields are expected to be slightly below average but we expect sugar production to at least achieve sales quota and to meet our bioethanol requirement,” ABF added.
“Beet costs for the forthcoming financial year were agreed in June 2012 at levels similar to those incurred in the campaign in this financial year.
Elsewhere, ABF said beet volumes in Spain were lower due to reduced planting, although this was partly offset by good yields, and production volumes in Africa were ahead of last year, with profit also helped by stable pricing, but profitability in China was lower than last year as a result of weak prices throughout the year.
The group’s agriculture division had a record year, with revenue rising by 11% to £1.41bn and operating profits by 18% to £47m.
ABF’s core grocery division saw operating profit grow by 24% to £232m, on revenue 3% ahead at £3.84bn, although rationalisation costs saw operating profit within the ingredients division plunge by 96% to just £1m despite revenue edging 2% higher to £1.088bn.
Looking ahead, ABF chairman Charles Sinclair said a further reduction in sugar profits was expected next year as EU sugar prices fell and the market adjusted ahead of the next regime reform in 2017.
However, Primark’s continued expansion together with revenue growth and margin improvement in the grocery division were expected to deliver further increases in profits.
“The lower level of borrowings and the retirement of more expensive long-term financing this year will lead to a reduced interest charge,” he added. “As a result, and at this early stage, we continue to expect adjusted earnings per share for the coming year to be similar to 2013.”