UK-based Associated British Foods (ABF) has suggested it is winding down efforts to secure price increases on its grocery products.
The Ryvita crackers and Jordans cereal brands owner said today (25 April) it had “by and large” recovered the costs linked to inflation in its supply chain, although margin recovery had not been achieved.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
“We think our pricing actions are largely done,” chief executive George Weston told analysts on a call to discuss the company’s half-year financial results.
“We will see better margins in grocery in the second half but not to the extent of getting back historic margins. That’s still a long way off.”
The margin for the 24-week period ending 4 March was 8.2%, compared to 9.6% a year earlier.
Commenting on the group’s performance, Weston said the company, which also owns the retail chain Primark and has ingredients and fuel arms, had achieved a “much better performance than we anticipated last summer”.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataHe added: “The food business in particular has been very resilient.”
Grocery division revenues were up 16% year-on-year at £2.10bn ($2.61bn). Operating profit was down marginally (1%) at £173m but the decline was less steep than for the group as a whole, which fell 7%.
Weston praised the performance of North American grocery which he said had been “outstanding”.
Looking ahead, ABF said: “In the second half the continued recovery of significant inflation in our input costs remains a management priority across the group, albeit that inflation has become less volatile, with some input costs reduced. Some macro-economic headwinds for the consumer remain.”
The Patak’s sauces and Kingsmill bread owner said, for the full year, adjusted operating profit in its food businesses as a whole is expected to be “modestly” ahead of last year.
“We now expect the grocery adjusted operating profit to be ahead of the prior year with the full-year benefit of the pricing actions and cost savings already taken,” it said.
For the full year, its expectation for the group remains for adjusted operating profit and adjusted earnings per share to be broadly in line with the previous financial year.
Last week, it was revealed ABF had taken part in an investment round for German nut butter and snacks start-up KoRo.
