ABF: Q1-2023 Interim Results Announcement

London / UK. (abf) Food, ingredients and retail group Associated British Foods PLC (ABF) announced its results for the 24 weeks ended 04 March 2023. The company reported strong growth in Group sales and at Primark a very good footfall and margin better than expected.

Comment from the CEO’s statement: George Weston, Chief Executive of Associated British Foods, said: «This period was marked by extreme and volatile inflation in all our businesses. We have taken considerable action to mitigate these costs through operational cost savings and, where appropriate, pricing. The performance of our Food businesses was resilient in aggregate, underpinned by an exceptional performance at Ingredients. We were very pleased with the improvement in Primark sales, which recovered strongly from the second half of the last financial year and drove operating profit margin up to 8.3 percent, higher than we had expected. Primark has been very successful in this period in attracting new customers with its proposition of good quality merchandise combined with price leadership and well invested stores.»

Grocery Division: Allied Bakeries secured significant pricing in the period and the results improved. The trajectory of this performance is encouraging with the financial performance improving through the period and, as a consequence, a bigger improvement is expected in the second half. ABF continues to work on improvements to the financial performance of this business. Early indications are that the significant brand investment made in the period by Jordans Dorset Ryvita is having a positive impact. Pricing at AB World Foods and Westmill led to higher sales.

Revenue growth was strong at ACH, ABF’s edible oils and bakery ingredients business in the US, driven by both Mazola and Fleischmann’s improving on their strong market share positions, and pricing taken to recover inflationary costs. Stratas, the joint venture in the US that supplies oils to the foodservice, ingredients and retail markets, continued to trade very strongly.

George Weston Foods in Australia delivered strong sales growth led by pricing. ABF’s Tip Top baking business traded well but faced a number of inflationary pressures, specifically very high prices for wheat used in bread due to a wet Australian harvest.

Sugar Division: AB Sugar revenues were 27 percent ahead of the same period last year driven by higher sugar and co-product prices, higher Illovo volumes, and the resumption of Vivergo bioethanol sales. The contribution from the higher sales was partly offset by higher costs for beet, cane and energy, increased processing costs in British Sugar, and a substantial trading loss at Vivergo. ABF also recognised a 10 million GBP charge for extensive flood damage to the cane estate in Mozambique following cyclone Freddy. Taking all this into account, adjusted operating profit was 5 percent ahead of the same period last year.

Ingredients Division: Sales and adjusted operating profit rose significantly in the period with a very strong performance by AB Mauri and ABF Ingredients performing well.

AB Mauri, the yeast and bakery ingredients business, saw sales rise strongly with successful actions on pricing and resilient volumes. All major regions, and North America in particular, showed good sales increases with the exception of China where demand was lower due to pandemic-related disruption. Adjusted operating profit grew significantly as a result. Looking ahead, construction of a new yeast plant in northern India has begun and plans to expand capacity in Brazil are on schedule for completion this year. AB Biotek, which develops high value yeast strains for non-baking applications, is now benefiting from more capability and innovation with the start-up this month of ABF’s new specialty yeast plant in Hull, UK.

ABF Ingredients, the portfolio of specialty ingredients businesses, delivered good organic revenue and profit growth and also benefited from the acquisition last year of Fytexia Group. Ohly, Abitec and SPI Pharma, ABF’s specialists in yeast extracts, lipids and pharmaceutical ingredients respectively, all delivered significant revenue growth, while the Group had good revenue growth at AB Enzymes and PGPI, the food and feed enzymes business and the extruded proteins business respectively. Fytexia continues to perform well. For additional information please read the company’s PDF file below (384 KB).