Twinings to cut jobs at North Shields from September

By Elaine Watson

- Last updated on GMT

Related tags North shields Associated british foods

The first wave of job cuts at Twinings’ North Shields tea factory will begin in September after union bosses failed to persuade parent company Associated British Foods (ABF) to keep the plant open.

ABF announced plans to close the site late last year as part of a restructuring of Twinings that would see UK tea production consolidated at its Andover facility, the construction of a new factory in Poland and a significant investment at its tea factory in China.

Jayne Shotton, regional organiser at the Usdaw trade union (Union of Shop, Distributive and Allied Workers), told Food that ABF had rejected a plan proposed by the union earlier that would keep the North Shields site open. She added: “We proposed keeping North Shields open, expanding in China but scrapping the plans for Poland, but they didn’t accept it, so we understand there will be phased job cuts at North Shields from September.”

Speaking as ABF posted a 20% rise in adjusted pre-tax profit to £331m on sales up 10% to £4.8bn in the 24 weeks to February 27, chief executive George Weston said the restructuring would be completed by summer 2012, but stressed that “a significant investment”​ would be made in high-speed automated packaging machinery at the Andover plant.

Grocery sales up 4%

Grocery sales in the first half rose by 4% to £1.59bn, while profit surged by 53% to £93m, ahead of analysts’ forecasts. This reflected “a strong underlying profit performance from all of our UK grocery businesses, reflecting the benefits of restructuring work undertaken last year, and a much improved contribution from our US bottled oils operations”, ​claimed Weston.

There was “good growth” from Kingsmill, Burgen increased its market share and Allinson “consolidated its position as the leading brand in the premium wholemeal sector​”, he said. Meanwhile, advertising support at ethnic food brand Patak's “drove good UK revenue growth​”, while exports of Patak's and Blue Dragon products were “strongly ahead of last year​”. Profits were also up at Ryvita following cost reduction and procurement initiatives, although sales dipped as some underperforming lines were delisted, he said.

Sugar profits ‘substantially ahead’

Profit from the sugar business​ was “substantially ahead of last year” ​following a strong performance from the UK and the recovery of domestic sugar prices in China, added Weston: “In the EU, the UK sugar business had an excellent campaign. Favourable growing conditions and improved beet yields led to production of 1.3m tonnes of sugar, which was better than expected and 9% ahead of last year. Despite freezing conditions over the winter, the crop was not significantly affected with the campaign finishing successfully in March. Factory performance was excellent with record operating efficiencies achieved.”

ABF’s Iberian sugar business Azucarera also started the year well, but had been dogged by heavy rain, he added. “In the south, much of the crop has been under water. With the southern crop drilled in October and therefore relatively newly emerged, the high level of rainfall is a cause for concern for the campaign scheduled to commence in June with a quota of 79,000t of sugar​.”

Its African sugar business Illovo had a “difficult second half of the season to March 2010​”, while a combination of drought and heavy rains in the region “restricted access to cane in the fields and brought refining to a premature close”.

The results went down well in the City. The rise in profits in grocery was “all the more impressive given that it includes a £19M reorganisation charge at Twinings​”, said Panmure Gordon analyst Graham Jones. “This was well ahead of our £80M forecast​.”

Shore Capital analyst Clive Black issued a ‘buy’ rating on the stock: “ABF has delivered excellent interim results with strong margin expansion. ABF has made progress across the board​.”

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