Food suppliers and retailers have taken a pummelling in the recent stock market sell-off. The FTSE All-Share has fallen 7.6% over the past month, driven down by fears of a Chinese credit crunch and concerns that the Fed and other central banks may soon roll back measures to stimulate the global economy.
The food industry has fared particularly badly. The FTSE food producer index has fallen 9.7% over the month and the FTSE food and drug retailer index is down 11.1%. The biggest faller on the retailer index is Tesco, whose shares have slumped 13.8% to 327.6p over the past month, dragged down by a 1% drop in like-for-like UK sales during the quarter ending 25 May.
Among suppliers, Associated British Foods and Premier Foods are the two big name fallers. ABF’s shares have fallen 12.6% to 1,689p over the past month amid concern about falling sugar prices and the prospect of tough comparatives for Primark. Investec analyst Martin Deboo said in May that “a summer in the share price doldrums continues to be the likely scenario”. So far, he has been proved right.
Premier Foods shares have fallen 17.3%. The shares started falling in response to the surprise departure of CEO Michael Clarke in January and have been on a downward path ever since.
But a few companies have managed to defy the market. Shares in New Britain Palm Oil, Cranswick, Nichols and Finsbury Foods have all risen against the tide.
New Britain Palm Oil has climbed the most, gaining 19% in a month to 494p on the back of an offer from Kulim, which already owns 49% of the company, to buy a further 20% stake at a price of 550p. Panmure analyst Graham Jones labelled it an “opportunistic bid” taking advantage of poor weather and unfavourable exchange rates, which have temporarily depressed earnings.
Shares in Finsbury Foods have also rocketed 17% to 61.8p, as the cake and bakery business reaped the rewards from good news earlier in the year. At the end of February, the company sold its free-from business, which allowed it to reinstate a dividend and substantially reduce its net debt. Shortly afterwards, it reported an increase of a third in pre-tax profits to £3m for the last six months of 2012.
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