East Anglia: British Sugar owner ABF reports improved prospects for this year’s beet crop

The British Sugar factory in Bury St Edmunds

The British Sugar factory in Bury St Edmunds

British Sugar owner Associated British Foods said today that its sugar business remained on track to meet its original hopes for the current year, despite a slump in revenues in recent months.

And ABF added that, with this year’s UK sugar beet crop now making better progress after a difficult start, sugar production next year was expected to exceed quota.

In a trading update for the 16 weeks to June 22, ABF said that a 15% fall in sugar revenues compared with the same period last year largely reflected a different phasing of UK volumes and the timing of shipments of Zambian exports to the European Union.

Year-to-date sugar revenues, covering the 40 weeks to June 22, were 1% ahead and for the full year were expected be “in line with our original projections”.

“Planting for the new year was later than usual and early growth was held back by unseasonably cold weather,” said ABF. “The crop is now making better progress and we expect sugar production next year to exceed both quota and the requirements for bioethanol production.”

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The group added that the price to be paid to growers for the 2013 beet crop had been agreed last June, at a level “comparable with that paid this year”.

However, although a price mechanism had already been agreed for the 2014 crop, discussions were continuing with the National Farmers’ Union over the supplement to be paid in addition to the base price, with British Sugar’s £3 per tonne proposal having been rejected by the NFU.

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Across the ABF group, total revenues were 8% ahead during the most recent 16-week period, and 9% ahead during the 40 weeks of the year so far.

The figure included a “marked improvement” in sales at its budget fashion chain Primark with the return of warmer weather, following subdued trading during the cold of March and April.

Total sales at Primark were 20% up in the 16-week period and 22% ahead for the year to date. ABF did not publish figures on a like-for-like basis but analysts suggested a slowdown to 3% in the 16 week period after a 7% rise in the previous half year.

Panmure Gordon analyst Graham Jones said this rate would still leave Primark “comfortably ahead of key peers”, while it had an impressive store opening programme lined up.

ABF said it was “deeply saddened” by the collapse of the Rana Plaza building in Bangladesh in April, where one of Primark’s suppliers was based. The catastrophe left more than 1,000 dead.

Primark donated food to 1,300 families after the tragedy and has paid short-term compensation to more than 3,300 workers from the building. It has pledged long-term compensation for victims who worked for their supplier, and their dependents.

Elsewhere, ABF reported an acceleraton in growth, with sales in its agriculture division 18% up in the last 16 weeks, against 12% for the year so far, with increases of 7% and 3% respectively for its grocery business, which includes brands such as Twinings, Ryvita and Jordans, and 5% and 2% for its ingredients division.

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