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‘Sugar beet costs to rise by £25M’: City analyst

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‘Sugar beet costs to rise by £25M’: City analyst

July 01
11:15 2013

The warning came after the National Farmers Union (NFU) yesterday (June 18) rejected an offer from British Sugar – owned by Associated British Foods (ABF) – that was £3/t above that indicated by the pricing formula.

Panmure Gordon analyst Graham Jones said: “We had already assumed a £30M fall in UK sugar profits in 2015 and, as such, are not changing our earnings per share forecast [for ABF] of 114.3p for 2015.”

Jones added that the shares were below its 1,800p price target, and were looking more attractive trading on 17.8 x price:earnings ratio and 9.5 x enterprise value divided by earnings before interest, tax, depreciation and amortisation.

‘Looking more attractive’

Panmure Gordon maintained its ‘hold’ recommendation on ABF stock.

NFU sugar board chairman William Martin said sugar beet growers would now enter phase two of negotiations with British Sugar.

“This demonstration of strength [in rejecting the British Sugar offer] sends a clear signal to them that we are united and we will be expecting a much better price if they want us to agree.

“Today’s meeting has given us a clear mandate to keep negotiating for a better, fairer price for all sugar beet growers, and ensure that the price you are paid reflects the value of the crop you grow.”

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