Tumbling sugar prices and volumes dragged down turnover at Associated British Foods in the first half of the year, the company said today.
Sales in its sugar division fell 22% to £1.03bn in the 24 weeks to 1 March 2014, while operating profit fell to £64m from £162m the year before.
ABF warned lower sales volumes and prices were likely to persist through the second half of the year, although world sugar prices “had shown some improvement recently”. As a result, the company would continue its “well-embedded” efficiency drive, it said.
Meanwhile turnover in ABF’s grocery division slipped 4%, but operating profit climbed 31%. ABF singled out the good performance of Kingsmill 50/50 and Allinson in the UK bread market, as well as growth for Ryvita Thins and Patak’s.
ABF’s retail division was lifted by 14% sales growth at Primark, which has announced plans to open its first US stores.
ABF’s overall turnover fell 6% to £6.2bn, while adjusted profit before tax rose 4% to £468m.
“The group as a whole has delivered a very resilient operational and financial result at a challenging time of transition for our European sugar business,” said ABF chief executive George Weston.
ABF chairman Charles Sinclair added: “Lower sugar prices will result, as previously indicated, in a substantial reduction in profit from Sugar this year and the current strength of sterling, if maintained, will have a greater impact on translation of overseas results in the second half.
“However, as Primark builds upon the success achieved in the first half and with further store expansion planned for the remainder of the year, Retail profits are expected to be well ahead. When combined with improvements in Grocery and Ingredients and a lower interest charge, we continue to expect adjusted earnings per share for the financial year to be similar to 2013.”
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