Delivering its pre-close trading update today (26 February), Associated British Foods said that operating profit for the first half of the year was inline with expectations despite lower grocery profits and increased commodity prices.
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During the half, AB Foods reported “good progress” in operating profit thanks to a strong performance from its sugar and fashion retail businesses. The company said that it anticipates progress in EPS over the year, but added that it expects this to be weighted in the second half.
First half profits from AB’s grocery businesses were lower than last year, primarily due to a poor performance by Allied Bakeries. The competitive UK bread market meant that the company had to delay recovering increased wheat prices by hiking retail prices while volumes were lower than expected.
AB said that it expects the performance of Allied Bakeries to improve in the second half, benefiting from price increases and the recent relaunch of its Kingsmill brand, with improved products and new packaging.
ACH performed well and benefited from a continued strong contribution from Capullo in Mexico, AB foods said, while Australian baking achieved price increases to recover higher wheat costs.
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By GlobalDataAB Foods said that its ingredients, sugar and fashion retail businesses all performed well during the half, putting it on track to meet its full year expectations.
