South American and Asian yeast markets bring strong gains in the first half, offsetting weaker markets in the US and Turkey, London-based sugar and ingredients group Associated British Foods reports today, writes Lindsey Partos.
The number three bakers' yeast maker in Europe, ABF reported a 12 per cent rise in operating profit to £217 million (€318m) for the 24 weeks to 5 March, up from £193 million for the previous year.
Earnings from the group, which supplies polyols, enzymes, yeast and bakery ingredients through its ingredients division, gained from recent acquisitions, notably the €1 billion purchase last year of Australian yeast giant Burns Philp.
The acquisition handed ABF far stronger access to a market currently topping 2.3 million tonnes and worth €1.16 billion annually.
Sales for the ingredients division of the group rose to £263 million from £133 million the previous year, bringing £32million in operating profit for the first half.
Yeast brands acquired through the Burns Philp acquisition include Mauri, Fleischmann and Calsa. The bakers' yeast business now trades under the AB Mauri name.
"At AB Mauri, the new organisation is well established. Although yeast pricing has weakened in North America and Turkey, and higher molasses and energy costs have affected profits in a number of countries, the operations in South America and Eastern Asia performed strongly," reported ABF today.
Growth in China has been "excellent" and a new factory is on target to open in Xinjiang, Western China, later this year, added the firm.
In the pipeline, the firm announced plans for the construction of a new plant in New Zealand, and the "rationalisation" of plants in India.
In the US, the food polyol business has slowed as the trend for low carbohydrate products in the US "has weakened but antacid sales and profit have improved."
ABF said speciality lipids and emulsifiers benefited from improved operational efficiencies, and the introduction of new plant sterol products.
The yeast market is soaring on the back of increasing demand for processed foods and a dynamic growth in food production, offsetting stagnant growth in developed countries that posts around 1 to 2 per cent.
The Burns Philp acquisition also expanded the bakery ingredients portfolio for the group - main products are bread improvers, conditioners, mixes, fats and oils. Combined with ABF's existing Cereform business, integration of existing bakery ingredients businesses in the UK, US and Australia with those of AB Mauri "has made good progress and provides the opportunity for important market and customer synergies," said the firm.