Sugar sweetens new year sales for ABF

By Jess Halliday

- Last updated on GMT

Related tags: Cent, Revenue

Associated British Foods has started its new financial year with a surprisingly good performance from its sugar business, causing analysts to raise their eyebrows and their H1 expectations.

The UK-based group reported a 23 per cent increase in sugar revenues in the three months up to 2 January, even without the inclusion of sales from Azucarera, the Spanish company it acquired from Ebro Puleva in April 2009. With Azucarera in the mix – and with sales exceeding expectations – the division is 68 per cent ahead of the same point last year.

ABF is in the throes of a good sugar campaign, with high yields per hectare contributing enabling better factory efficiencies and lower energy costs. ABF is expecting a total haul of around 1.3m tonnes from its current sugar campaign.

Andrew Wood, a senior research analyst at Bernstein, said the growth was way ahead of H1 revenue growth estimates, which have now been raised to 62 per cent positive.

Even combined with the less rosy agriculture results Wood saw cause to raise the combined growth expectation to 39 per cent positive, from 19 per cent positive. Despite the interim report being “vague” ​and sparse on solid figures, Wood said the update for the group at large looks positive.

Ingredients in line

The performance from ingredients was broadly in time with expectations, with up 11 per cent on last year (5 per cent in constant currencies). Yeast and bakery ingredients are said to be doing especially well in the Americas, continuing a solid performance in during the last full year.

In Europe, profitability was given a boost by better lactose prices in specialty proteins, and lower overhead costs. ​Ingredients made up 11 per cent of total company sales and 11 per cent of operating profits.

In the last H2, ingredients fell short of expectations. Wood had predicted growth of 18 per cent, but only 12 per cent was achieved.

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