EU sugar prices hit ABF’s AB Sugar performance

By Dan Colombini contact

- Last updated on GMT

Chief executive George Watson said this fall was largely caused by the firm’s sugar-related performance in the first half of the year.
Chief executive George Watson said this fall was largely caused by the firm’s sugar-related performance in the first half of the year.

Related tags: Ingredients & nutrition, Supply chain

Associated British Foods (ABF) has revealed a downturn in the performance of its UK sugar business, AB Sugar, as a result of declining EU sugar prices.

The firm issued its annual results for the period ending 14 September 2019, citing a 5% drop in AB Sugar revenues.

Operating profit for AB Sugar was well down, at £26m, as opposed to £123m the previous year. This highlighted an adjusted decrease in margins to 1.6% from 7.1% in 2018.

Chief executive George Watson said this fall was largely caused by the firm’s sugar-related performance in the first half of the year.

Poor crop

Sugar prices were much lower this year and impacted our UK and Spanish businesses, while a poor crop reduced production and sales volumes in China​,” he said.

This decline resulted from a coincidence of a regional oversupply of sugar and the end of the EU sugar regime.”

Despite this, the firm stressed that the upturn in EU sugar cost margins, meant it expected an ongoing improvement over this coming year.

“Following the subsequent reduction in EU sugar supply, sugar prices have increased, and we look forward to a material increase in our sugar profit in the coming year​,” he noted.

Cost reduction

In the coming year, AB Sugar will benefit materially from the increase seen this year in EU sugar prices and from further cost reduction,​” chairman Michael McLintock added.

For the wider firm, grocery revenues were 2% ahead of last year at constant currency, and growth in adjusted operating profit remained strong, at 10%.

ABF posted grocery revenues of £3.5bn, up from £3.4bn the previous year. Operating profit also rose to £380m, offset against £335m in 2018.

We expect another year of strong profit and margin growth in Grocery, with Twinings Ovaltine in particular benefiting from a more efficient tea supply chain​,” Watson confirmed.

Group revenues rose 2% to £15.8bn, with operating profit also rising 1% to £1.4bn. Profit before tax also rose 2% to around £1.4bn.

Meanwhile, last month ABF announced the appointment of Peter Watson​ as the new agriculture director at British Sugar.

 

Related news

Show more

comments

Post your comment

We will not publish your email address on the website

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.

Follow us

Featured Events

View more

Products

View more

Webinars