Profits rise for ABF after Brexit vote

By James Ridler contact

- Last updated on GMT

ABF posts revenue and profit growth
ABF posts revenue and profit growth
Associated British Foods (ABF) has posted growth in group revenue to £13.4bn in the 53 weeks to September 17 2016, a 5% rise from last year.

It also announced growth of 3% in its adjusted operating profit to £1.1bn. The growth was in-line with the company’s predictions in its last trading update released in September.

ABF chief executive George Weston said it had been a year of progress for the business, with increased margins in all of its food businesses and structural changes at AB Sugar.

“The recent decline in the value of sterling presents both benefits and challenges to the group​,” said Weston.

‘Broad geographical footprint’

“The diversity of our operations and our broad geographical footprint, combined with a strong balance sheet, equip us well to take advantage of these opportunities as they arise."

Revenues at Allied Bakeries had risen thanks to an increase in Kingsmill sales, boosted by the success of Kingsmill Sandwich Thins – leading to the creation of a second production line.

ABF saw its sugar division strengthen thanks to an increase in world sugar prices and a reduction in EU stock levels, which benefitted its Spanish business.

These results will not bare fruit in the UK until the end of the next financial year, due to its sugar contracts being agreed on an annual basis.

This week’s results saw ABF’s profits grow since last year, after they fell by at least £30M due to a significant weakening of the euro in 2015.

A weaker pound

However, a weaker pound since the UK’s decision to leave the EU had benefitted ABF during the third quarter of the year.

Weston added that the referendum on the UK's continued membership of the EU had created some short-term uncertainties, as well as a decline in the value of the pound. 

“However, changes in legislation and trade agreements, particularly in the areas of trade tariffs and UK agricultural policy have the potential to benefit the group,” ​said Weston.

“The current level of sterling offers UK food producers significant opportunities to replace imported food and build export markets.”

ABF results – at a glance

  • Group revenue: £13.4bn +5%
  • Adjusted operating profit: £1.1bn +3%
  • Adjusted profit before tax up 5% to £1,071M
  • Adjusted earnings per share up 5% at 106.2p
  • Dividends per share up 5% to 36.75p
  • Gross investment of £1bn
  • Net debt £315m

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