ABF: half-year profits climb 20 percent

London / UK. (abf) Food, ingredients and retail group Associated British Foods PLC (ABF) announced its 2010 interim results for the 24 weeks ended 27 February 2010. The company said strong trading at its Primark discount clothing chain and in its sugar business helped boost interim earnings. Summary:

  • Group revenue up ten percent to 4’796 million GBP
  • Adjusted operating profit up 25 percent at 370 million GBP*
  • Adjusted profit before tax up 20 percent to 331 million GBP**
  • Adjusted earnings per share up 21 percent at 30,5 Pence**
  • Dividend per share up ten percent to 7,6 Pence
  • Net debt of 1’090 million GBP
  • Operating profit up 29 percent to 336 million GBP,
    profit before tax up 80 percent to 320 million GBP and
    basic earnings per share up 80 percent to 0,316 GBP.

George Weston, Chief Executive of Associated British Foods: «The investments made in recent years are now delivering very satisfying returns throughout the group. Our Sugar business has been transformed, our brands and marketing strategies are driving growth in Grocery, the broad geographic base continues to drive momentum in Ingredients, and Primark goes from strength to strength».

Operating review (abridgement)

The complete announcement (PDF) is available here.

Grocery revenue increased by four percent to 1’597 million GBP and profit rose by 53 percent to 95 million GBP. This represents a strong underlying profit performance from all of the company´s UK grocery businesses, reflecting the benefits of restructuring work undertaken last year, and a much improved contribution from our US bottled oils operations all of which more than offset a charge for manufacturing reorganisation at Twinings.

In the UK, Allied Bakeries continued to trade well with the Kingsmill brand delivering good growth. Revenues were underpinned by advertising, particularly around the successful launch last autumn of the Little Big Loaf. Other brands also saw growth, with Burgen increasing its share of the positive health market and Allinson consolidating its position as the leading brand in the premium wholemeal sector. Profit benefited from an improved mix of branded sales despite increased promotional expenditure.

In Australia, operational improvements and new product launches by the company´s bakery business resulted in an increase in profit, enhanced in sterling terms by the strength of the Australian Dollar.

Silver Spoon saw an increase in demand for home-baking ingredients, particularly the Cakecraft range which was launched last summer, unrefined cane sugars and Allinson flour. Profit benefited from this higher demand and also from last year´s packaging plant rationalisation that transferred operations from Newark to the expanded plant at Bury St Edmunds.

Ingredients achieved a revenue increase of seven percent over last year to 509 million GBP and, with an improved margin, operating profit increased by 18 percent to 47 million GBP. The yeast and bakery ingredients business traded well and ABF Ingredients benefited from better lactose prices in speciality proteins and from lower overhead costs.

AB Mauri, the company´s yeast and bakery ingredients business, delivered a strong performance. Trading results, particularly in North America and Latin America, were significantly above the prior year, driven by a good performance in the yeast businesses coupled with the continued expansion of our technical and traditional bakery ingredients business. Commodity costs were generally lower than last year although the benefit was partly offset by localised increases in molasses costs driven by high world sugar prices. The integration of the recently acquired European bakery ingredients business was completed and contributed strongly to the result.

Info: The complete announcement is available here (PDF, 25 pages, 155 KB).

Addition

* before amortisation of non-operating intangibles and profits less losses on the sale of property, plant and equipment.
** before amortisation of non-operating intangibles, profits less losses on the sale of property, plant and equipment and profits less losses on the sale and closure of businesses.
All figures stated after amortisation of non-operating intangibles, profits less losses on the sale of property, plant and equipment, profits less losses on the sale and closure of businesses are shown on the face of the condensed consolidated income statement.
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