Challenging Year for Associated British Foods
Associated British Foods has reported a 3% decline in revenue to £12.9 billion for the 52 weeks ended 13 September 2014 with operating profit down 1% to £1.163 billion as adverse currency movements and commodity price deflation impacted performance at its sugar and food businesses. On a constant currency basis, group revenue increased by 1% and adjusted profit rose by 2%.
The prices of wheat, barley, corn oil, rice and sugar all fell during the year. Consequently, ABF’s food businesses were unable to sustain the revenue growth achieved in recent years. However, ABF’s Agriculture, Grocery and Ingredients businesses managed to improve profit and margin.
Operationally AB Sugar had a strong year with good factory performances and further substantial cost reductions but the business was impacted by the changes in the EU sugar regime. Indeed, EU prices are expected to fall further during the coming year, but ABF remains confident that its well-invested sugar assets make it one of the world’s lowest cost sugar producers.
Primark, ABF’s retail arm, was the star performer as a strong store opening programme helped to drive revenues up to almost £5 billion.
George Weston (pictured), chief executive of Associated British Foods, says: “Significant progress was achieved in operating profit by Grocery, Agriculture, Ingredients and Primark, all of which substantially out-performed last year. Primark’s trading success and significant expansion delivered another magnificent year. Much lower sugar prices in the EU held back the group’s profit growth although, operationally, Sugar performed well.”
