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September 7, 2020

ABF FY grocery sales rise, books bakery writedown

Associated British Foods is to see annual sales from its grocery business increase but the UK group has posted a write-down related to its domestic bakery arm.

By Dean Best

Associated British Foods is to see annual sales from its grocery business increase but the UK group has posted a write-down related to its domestic bakery arm.

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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
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In a pre-close trading update ahead of the publication of ABF’s full-year results in November, the Kingsmill bread and Patak’s cooking sauces owner said it will see growth from its UK grocery business, its ACH unit in the US and its George Weston Foods subsidiary in Australia.

ABF’s financial year runs to 12 September and the company said Covid-19 had boosted its grocery sales in the second half of the period thanks to “increased retail demand”.

The company, which also operates in sectors including ingredients and clothing retail, said “adjusted operating profit” from its grocery division will be “significantly ahead” on the year before, pointing to “volume-driven margin gains” from ACH, George Weston Foods and its UK grocery arm. The company said those increases would “more than offset” a one-time, non-cash, write-down of assets within its UK bread unit Allied Bakeries of GBP15m (US$19.8m).

Sales from Allied Bakeries are set to have fallen following the end of the division’s largest private-label bread contract. ABF said cost reductions and “a Covid-19 related uplift in sales” had led to “an improved underlying operating result” but the company has reviewed the carrying values of some of Allied Bakeries’ distribution assets, resulting in the GBP15m charge.

Elsewhere, two other UK units, Westmill and AB Sports Nutrition, are set to have seen sales and profits fall due to the reduction in foodservice activity and sports events respectively. However, ABF said its Silver Spoon, Jordans, Dorset Cereals, Ryvita and AB World Foods units all benefited from “significant increases in consumer demand in the second half”.

Balsamic vinegar business Acetum grew, benefiting from higher demand for balsamic vinegar in North America. The local business, ACH, “performed extremely strongly” driven by increased sales of home baking products.

In Australia, George Weston Foods “delivered excellent sales growth and margin improvement”.

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Free Report
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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

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