Blog: Dean BestWhat are the prospects for ABF's grocery business?

Dean Best | 22 November 2010

Is Associated British Foods' grocery business the "sick child" of the company's empire? One analyst thinks so.

Andrew Wood, an analyst at Sanford Bernstein, described ABF's grocery division as such in the wake of the company's annual results earlier this month.

Underlying profits from ABF's grocery arm, which includes brands like Patak's cooking sauces, Kingsmill bread and Mazola cooking oil, were up 20%. Sales increased 7%, although on a constant-currency basis, revenue was from the division was flat.

However, Wood said he still believed the grocery division would be a "low-growth, low-margin" business and is the "sick child" of a business that includes food ingredients, sugar and discount retail chain Primark.

Wood's comments came a day after ABF published its numbers. On the day the figures were announced, just-food spoke to ABF finance director John Bason, who has been at the business for over a decade and seen a raft of changes within its grocery division.

In the interview, published in full today (22 November), Bason said he was "really pleased" with the results from grocery, a business that he said had gone through "a lot of restructuring".

The spectre of rising raw-material costs remains a concern, which Bason acknowledged but he was optimistic about the prospects for the ABF's grocery division and said the group is lining up investment in the UK and overseas, including its latest relaunch here - that of ethnic cuisine brand Blue Dragon.


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