Associated British Foods has said that despite pressures such as currency effects and raw material costs, its businesses have performed well in the second half to 18 September and the company now expects second half operating profit growth to be similar to that achieved in the first half. 

The company said British Sugar in the UK had a good second half with a crop of 1.37m tonnes and record factory performance but, as expected, profit will have reduced in the second half as compared to the same period last year due to the weakness of the euro against sterling. However, the benefit of higher sugar prices both in Poland, following the introduction of the EU sugar regime, and in China, will more than offset the decline in profit in the UK.

In the company's grocery division, key raw material prices remained high throughout the second half but most of the unit's businesses successfully mitigated these higher costs through price increases and improved efficiencies. In the US, although corn and soy oil costs remained significantly ahead of last year they are now below their peak, ABF said.

Trading at George Weston Foods in Australia continued to be affected by competitor pricing pressure in the bread market. Construction of the new Sydney bakery is progressing and it is expected to be fully ready in summer 2005.

Expenditure on acquisitions in the financial year, including debt acquired, is expected to be £242m (US$434.4m), which mainly comprises the US herbs and spices business of Burns Philp, the Capullo vegetable oil business in Mexico, the foods brands of G Costa and Billington's sugar.  Proceeds from disposals, including the ruminant compound feed business of ABNA and the realisation of associated working capital, are estimated at £41m.