FDBusiness.com

Associated British Foods has reported a 10% increase in group revenues to £6.33 billion and a 20% rise in adjusted operating profit to £496 million for the first half. Operating profit at £459 million, was 21% ahead of the corresponding period in the previous year, and profit before tax advanced 26% to £415 million.

The Primark retail business traded exceptionally well during a difficult time for many retailers on European high streets.

Although the consumer food industry in developed countries faces the continuing challenge of consumers seeking more value as their disposable incomes are squeezed, ABF’s Grocery businesses performed well during the first half and are expecting further growth. Allied Bakeries continued its capital investment to reduce its cost base. George Weston Foods in Australia also made considerable progress, following a period of operational and commercial difficulties.

ABF’s Sugar business came under pricing pressure in the first half having achieved strong operating profit in the last financial year as a consequence of careful investment together with higher production volumes and prices in the regions where it operates. However, AB Sugar has already been faced with much lower prices in China this year and expects pressure in the EU and some countries in Africa. Its focus is on improving efficiency, reducing cost and selectively increasing capacity and downstream capability to mitigate the effects on operating profit of margin reduction from lower prices.

George Weston, chief executive of Associated British Foods, comments: “This is an excellent set of results with adjusted operating profit up 20%, a stronger cash flow and a year-on-year reduction in net debt. We are committed to the long-term development of our businesses through investment. These results have been achieved through a focus on generating good returns from the investments we have made over recent years.”