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September 10, 2007

UK: Sugar to drive ABF growth as grocery suffers

Associated British Foods has insisted that full-year profits will be in line with expectations with rising earnings from its sugar operations offsetting problems from its grocery business.

Associated British Foods has insisted that full-year profits will be in line with expectations with rising earnings from its sugar operations offsetting problems from its grocery business.


ABF, the maker of Kingsmill bread and Twinings teas, said in a trading update this morning (10 September) the acquisition of its Illovo sugar operations had helped compensate for losses from Allied Bakeries and charges from its ACH and Blue Dragon businesses.


The company relaunched Kingsmill earlier this year to revive sales but rising commodity costs have put pressure on its grocery arm.


ABF followed Premier Foods’ alert last week on bread prices with a warning that a further hike in the price of bread was needed to cover rising flour costs.


Commodity costs have also weighed on the company’s ACH operations in North America with the cost of vegetable oils putting pressure on margins.


Profits from ABF’s ingredients business have also been hit by currency fluctuations, particularly the strength of the Brazilian real.


ABF’s full-year results are slated for publication on 6 November.

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