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November 4, 2008

UK: Grocery helps drive ABF profits

A jump in sales and earnings from its grocery business has driven rising annual profits at Associated British Foods, the UK food group said today (4 November).

A jump in sales and earnings from its grocery business has driven rising annual profits at Associated British Foods, the UK food group said today (4 November).


The company, which makes brands including Ryvita and Kingsmill, saw underlying operating profit from its grocery division rise 26.8% to GBP194m (US$305.9m) during the year to 13 September.


The business, which also saw sales climb 24.9% to GBP3.25bn, helped push up revenue and profits across the group. ABF booked underlying operating profit of GBP664m, a rise of 7% on the year. Turnover was up 21% to GBP8.2bn.


Chief executive George Weston said acquisitions, rising volumes and success in pushing through price increases had driven the growth from ABF’s grocery business.


“Revenue for the year increased 25% on last year. This was driven through a combination of
acquisitions, price increases to recover commodity cost inflation and volume growth,” Weston said.


“Profit was ahead 27% as a result of the substantial improvement at Allied Bakeries and good growth from Twinings Ovaltine, Westmill and milling and baking in Australia.”


Earnings from ABF’s sugar business fell 23.1% to GBP153m as costs linked to reform of the EU sugar industry and lower sugar prices in China hit profits. Revenue, however, was up 10.1% to GBP1.27bn.


Operating profit from ABF’s ingredients business rose 5.6% to GBP75m, although margins fell due to rising raw material costs. Revenue was up 20.6% to GBP842m thanks to organic growth from ABF’s yeast business and the acquisition of a bakery ingredients maker in Italy.


Weston said ABF’s results demonstrated the “resilience” of the group and added that the company was “committed” to further expansion, particularly of its sugar business and its discount clothing retail arm Primark.

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