Associated British Foods (ABF) said trading for the group has been “strong” since the half-year, resulting in an increase in adjusted operating profit for the second-half compared to the previous year.
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In an update prior to the close period for its full-year results, the maker of Silver Spoon sugar said its grocery division in particular achieved good revenue and operating profit growth. This was driven by progress in Allied Bakeries, Twinings Ovaltine and the company’s Australian business.
ABF said its ingredients businesses continued to benefit from the weakness of sterling against the US dollar and the euro. The yeast and bakery ingredients business of AB Mauri performed “well”, with good progress made in yeast in South America and in technical ingredients in the Americas, but with tough trading conditions experienced in India.
The company said it expects sugar profit to be “substantially ahead of last year” driven by growth in the EU and Illovo which more than offset losses in China.
In the EU, ABF’s UK and Polish businesses delivered “good results with solid operating performances, robust sales”, the benefit of a strong euro and favourable energy costs.
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By GlobalDataABF acquired Azucarera Ebro, the leading sugar producer in Iberia, in April this year. This was followed by the announcement in August that it had reached an agreement to sell its Polish sugar business to Pfeifer & Langen Polska. Completion is expected in late 2009.
The company said that further progress in working capital management in the second half will result in an outflow substantially lower than last year, more than covering the increase in capital expenditure.
Net debt for the group at the year end is now expected to be close to the level at the half year. The rights issue announced by Illovo in South Africa will complete early in the group’s new financial year which will result in a further reduction in the group’s net debt of some GBP100m.
The company’s full-year results are expected to be announced on 3 November.
