Associated British Foods said today (7 September) it expects annual operating profit from its grocery arm to be ahead of last year despite revenues falling amid lower commodity prices.
In a pre-close trading update for the 52 weeks to 12 September, ABF said profits from each of AB World Foods, Australian arm George Weston Foods and beverages business Twinings Ovaltine had risen.
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Earnings from UK bread arm Allied Bakeries had fallen amid lower bread prices. The Kingsmill owner said sales volumes increased year-on-year.
At AB World Foods, the company's Patak's and Blue Dragon units lost some "non-core business" leading to lower revenues. However, an improved sales mix drove an overall margin increase, leading to the higher operating profit.
In Australia, George Weston's meat arm is set to offset lower margins from its bread business, which was affected by "heavy price promotion activity". The Don KRC meat business enjoyed improved profit margins in the second half with higher volumes and improved production efficiency.
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ABF said Twinings Ovaltine grew its market share "in a number of regions" and generated "a strong profit increase".
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By GlobalDataThe group did not disclose the profit performance of its other grocery units. However, it said UK consumer sugar business Silver Spoon had "substantially improved efficiency" due to work on costs.
Dorset Cereals, the UK muesli maker, has traded "ahead of business plan" since it was acquired last year. Fellow UK cereal business Jordans "continues to perform well" ABF said. However, Ryvita crispbread sales were lower in a competitive market.
In North America, ABF's ACH unit saw "strong volume growth" for its Mazola brand after investment in advertising that claimed to show the cholesterol-lowering benefits of corn oil.
Overall, ABF said its expectations for group full-year results were unchanged. Adjusted operating profit will fall amid lower earnings from its sugar division, and the impact of foreign exchange.
"Our earnings expectation for this financial year continues to reflect a modest decline in adjusted earnings per share for the group for the full year," ABF added.
Full-year results will be announced on 3 November.
