Associated British Foods has seen an increase in annual profits as surging commodity costs drove price increases at its grocery unit and consumers increasingly turned to Primark, the UK firm’s budget clothing chain.
In a pre-close trading update issued this morning (8 September), ABF said it anticipates progress in earnings per share for the full year. The company did not provide information on the amount that profit is expected to rise.
ABF said that it successfully offset higher ingredients costs with price increases at its grocery unit, while higher commodity costs drove profit gains at its agricultural unit.
ABF said grocery revenue and profit growth was “strong” in the second half with volume gains also contributing to rising grocery profits.
An improved performance from Allied Bakeries and “some recovery” at ACH, ABF’s North American vegetable oil and consumer products business, also helped profit growth.
Meanwhile, ABF said the integration of the recently-combined Jordans and Ryvita businesses, in which the company holds a 62% stake, is “underway”.
The Primark clothing retail business also posted revenue gains as UK consumers looked to cut spending in response to the credit crunch.
However, earnings at ABF’s sugar business remained under pressure following the reorganisation of the EU’s sugar regime.
“Good growth in adjusted operating profit driven by Primark, grocery and agriculture will more than offset the previously-highlighted decline in profit from our EU sugar operations and the higher interest charge which is a consequence of higher average net debt for the group,” the company said.