ABF set to enter into China joint venture

By James Ridler contact

- Last updated on GMT

ABF is to enter a joint partnership with Yihai Arawana Holdings
ABF is to enter a joint partnership with Yihai Arawana Holdings
Associated British Foods (ABF) plans to strengthen its presence in China through a joint venture with Yihai Kerry Arawana Holdings Company.

The 50:50 joint venture would acquire the existing Chinese yeast and bakery ingredients activities of ABF subsidiary AB Mauri and leverage Yihai’s supply chain, sales and distribution network and local market expertise in China.

A new yeast plant would also be built as part of the deal, co-located with Yihai-owner Wilmar International’s food processing factory in the Taha Industrial Zone in Qiqihar City, China.

The joint venture company (yet to be named) would be headquartered in Shanghai, with the completion of the deal subject to regulatory approvals.

‘Build on the foundation’

AB Mauri chief executive Cathal Duffy said: “This joint venture is a great opportunity to build on the foundation of our yeast and bakery ingredients business in China. We are looking forward to working with Yihai Kerry Arawana on the shared vision of building a successful bakery business together.”

Wilmar’s chairman and chief executive Kuok Khoon Hong, added: “Besides enhancing the range of quality ingredients, this joint venture will enable us to leverage on AB Mauri’s baking know-how and technology to provide better service to the baking industry in China.”

Profits drop

ABF’s latest foray into China followed a 15% drop in pre-tax profit in its latest half-year results, thanks to struggling sugar sales. Sugar profits plummeted 99% to £1m from £881m in the previous year, thanks to lower EU contracted prices and a poor crop in China.

Commenting on the results, ABF said: “We expect the profit decline for the full year to be reflected in this first half and for second-half profits to be in line with those achieved in the second half last year. Operating profit for the full year remains in line with our expectations.”​

Meanwhile, retailer Marks & Spencer has announced that it is to enter into a joint venture with online operator Ocado.

Related topics: Bakery

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