FDBusiness.com

Associated British Foods, the UK-based diversified international food, ingredients and retail group, has reported a 25% increase in operating profit to £1.093 billion and a 15% rise in profit before tax to £876 million on group revenue up 9% to £13.3 billion for the 52 weeks ended 14 September 2013.

This operating performance resulted in a strong cash flow and a healthy reduction in the group’s net debt. ABF’s Grocery margins improved with a recovery in both the baking and meat businesses of George Weston Foods in Australia. The results in UK Grocery showed good progress from Jordans, Ryvita, Westmill and AB World Foods, offset by margin pressure in the bakeries and Silver Spoon.

The momentum of recent years in AB Agri continued and underlying trading in Ingredients achieved some stabilisation. AB Sugar performed well, delivering a result which, although below last year’s high level, was in line with our expectations.

The decline in AB Sugar’s profit in 2013 was the result of lower European production and higher beet costs for British Sugar. In June this year, the European Council of Ministers confirmed that EU sugar quotas for domestic production would end in 2017 and the market has already started to react. Pricing for the 2014 financial year is lower as a consequence of the greater availability of sugar globally and an increase in competition.

ABF’s capital expenditure was lower again this year. Investment included the completion of the new yeast plant in Mexico and the South African warehouse and Tanzanian distillery for Illovo, and further expenditure on ABF’s programme to reduce the cost base at Allied Bakeries with new bread plants at three of its UK bakeries.

ABF’s retail business, Primark, had an outstanding year, increasing profit by 44% and adding a further 800,000 sq ft, or 10%, to its already substantial estate.

George Weston, chief executive of Associated British Foods, says: “I am delighted to report that the group has again delivered a great set of results. Grocery was much improved, Agriculture achieved record profits, Sugar was in line with our expectations and it was a remarkable year for Primark.”