Peter Jackson, CEO of Associated British Foods (ABF), revealed yesterday that the diverse sugar to clothes conglomerate is on the look out for acquisitions. But shareholders could benefit from the £1bn cash the company seems set to stockpile if it does not add to brand portfolio. The comments came as ABF unveiled better-than-expected financial results for H1.
Analysts have long berated ABF for what is perceived as an unfocused business strategy, with too much emphasis on staid food categories. The 60% Weston family-controlled owner of British Sugar, Ryvita, animal feed, Twinings tea and discount clothes chain Primark rejects such criticism, assertively ruling out the possibility of spinning off further businesses to give ABF increasing investor appeal. At most, Jackson responds to analysts saying that he prefers to swap the term “conglomerate” for “a sensibly balanced diversified business.”
“We have no plans to sell anything,” he stressed, adding: “although nothing is set in stone.”
Despite the scepticism of market spectators, ABF is proving its worth financially. After its disposal of its UK starch business and Burtons biscuits brands, H1 profits were up by a better-than-expected 12% to £191m, and Jackson has promised that the full year financial results “would not disappoint.” The foot and mouth epidemic has had, he insisted, only a minimal effect on animal feed sales because “less than 5% of our animal feed sales are to sheep.”
For the rest of the businesses within ABF, the focus is very much on improving the returns on assets. Ryvita and Twinings were the top performers during H1 and the firm’s Kingsmill bread brand has now overtaken staple favourite Hovis as market leader. The financial future of the sugar arm is uncertain in the light of the EU sugar reforms.