Ingredients contribute to strong ABF quarter
profits, which includes a 3 per cent increase from the ingredients
division achieved despite adverse currency translation and losses
relating to the sale of the US food polyols business.
Operating profits at the group reached £272 million (€400.5m) thanks in part to a strong performance from its newly-extended sugar division, the easing of commodity costs and overseas business. In ingredients, revenue for the reporting period was up seven per cent on last year to £345m, and operating profits 3 per cent to £33m. Good progress was seen in enzymes and proteins, especially in the US and Asia - although enzyme sales were, to some extent, impacted by higher raw material costs. The company is presently expanding production at its enzyme plant in Finland to meet demand. Likewise, capacity expansions are underway at ABF's yeast extract and milk protein isolate plants, and a protein specialties group has been set up to help build capacity in the value-added sector. ABF reported an increase in protein profits, thanks to higher sales volumes and improved pricing. In February, ABF completed the sale of its commodity food polyols business in the US, and its old manufacturing plant in Delaware is tabled for phased closure. "The loss on disposal of this business, including the write-off of goodwill and the costs of plant closure, is provided for in these accounts," said the firm. ABF said it strengthened its resources in bakery ingredients during the quarter - albeit from a low base - and the yeast business also showed progress, with price increases in some markets offsetting higher costs for molasses and energy costs. Moreover good organic growth in yeast and bakery ingredients was particularly seen in developing countries, "driven by the use of our ingredient technology and the launch of a range of new product to the craft bakery sectors," the company said. However the optimistic results for bakery ingredients were not carried through to a poorly performing bakery division (finished products). Operating profit for ABF's grocery portfolio fell from £84 million (€123.6m) to £64 million (€94.2m) over the past year. A competitive UK bakery market dampened sales and slowed recovery from high wheat prices caused by the summer heatwave. Group chairman Martin Adamson said: "This half year shows the early benefits of the investment made last year and has been a period of considerable activity which has seen the group perform well against a backdrop of challenging market conditions." Boosting ABF figures is the sugar division. Today's interim results incorporate, for the first time, contribution made from Illuvo - Africa's largest sugar producer, 51 per cent of which was acquired by ABF in September last year. Illuvo joined a sugar portfolio that includes British Sugar, several Polish operations and other facilities scattered around the globe. It now supplies Fair Trade sugar to UK business Billington's. According to ABF, all sugar operations showed strong growth in the first half despite rocky trading conditions due to ongoing EU sugar reform and a recent EC-imposed withdrawal in quotas. Profits generated from the sugar division rose 64 per cent and doubled primary food revenue to £579 million (€852.4m).