Blog: Dean BestWhy there is uncertainty around ABF

Dean Best | 17 January 2008

Questions still hang over Associated British Foods, despite shares in the UK company rising after a trading update this morning (17 January).

And those questions remain in food.

The market was cheered after ABF reported strong sales growth from its clothing retail arm Primark, which has been one of the growth engine’s of the business in recent months.

Nevertheless, uncertainty remains around ABF’s food and ingredients business. The company warned that EU sugar reform and higher energy costs would lead to lower profits from its UK sugar business this year. Costs, meanwhile, have also hit ABF's margins in the US,

And there is some reservation about ABF’s bakery business, which in recent months has concerned investors.

Today, the Kingsmill baker, though vague on detail, said its bread arm was seeing “improvement”.

But whether that stops speculation surrounding ABF’s future in baking – the industry where the company began back in the 1930s – is an open question.


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