Primark and sugar boost AB Foods

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Manufacturing News, Source : TheManufacturer.com
Published : 24 Apr 2007 7:33
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Associated British Foods saw first half profits rise by five per cent to £268 million on sales that were up 12 per cent to £3.2 billion.

Announcing its interim results for the six months to 3 March, Europe's fifth biggest food group said it was "a good set of results" with growth in revenue and profit reflecting the investment it had made in capital and acquisitions last year. The advances made by the company's in-vogue budget fashion store Primark and sugar were the beginning of the benefits ABF expected from that investment, said chief executive George Weston.

The performance of Allied Bakeries was described as "disappointing" and led to a reduction in grocery profit. A major relaunch of the Kingsmill brand had now been implemented. Ingredients made good progress but profits were held back by the impact of currency translation.

Chairman Martin Adamson reported that British Sugar will commission the UK's first bioethanol fuel plant at its Wissington, Essex facility in June with commercial sales of ethanol starting later in the summer. The plant will have the capacity to deliver 55,000 tonnes or 70 million litres per year of ethanol to the UK market for blending with petrol. British Sugar is also continuing to develop plans for a cereal based biofuel facility in the UK.

In grocery, Adamson said the major issue was the disappointing results from the UK bakeries. Following the relaunch of the Kingsmill brand in February better trading is expected in the second half.

Primark opened 23 new stores in the period and all but four of the former Littlewoods shops had been converted and were trading as Primark stores. Primark's sales and profit in the first half were 36 per cent and 28 per cent respectively ahead of the previous year mainly due to the additional retail selling space. Looking ahead, Adamson said the successful outcome of the European Commission's refinement of the terms of sugar regime restructuring, due over the coming months, would be of great importance.

"Following the extensive Primark store opening programme we will now take the opportunity to optimise the performance of these new stores. Our businesses are well placed to face the competitive conditions in the markets in which they operate. Despite continuing adverse currency translation impacts, we expect progress in adjusted operating profit and in adjusted earnings in the remainder of the year," he concluded.