FDBusiness.com

Associated British Foods has reported a 5% fall in adjusted operating profit to £474 million for the 24 weeks ended 28 February 2015 on group revenues up 1% at £6.248 billion. At constant currency, first half profits were 2% lower and revenues were 3% ahead. With the notable exception of the US dollar, sterling strengthened against most of ABF’s major trading currencies which had a negative effect on operating profit of £11 million on the translation of overseas results.

Significant progress was made in operating profit by Primark, ABF’s retail arm, and by the Agriculture and Ingredients businesses, and further improvement was achieved in the Grocery division’s margin. However, as expected, profitability at AB Sugar was substantially lower as a result of much weaker euro-denominated EU sugar prices.

Sugar revenue in the first half was £928 million – 6% lower than last year at constant currency driven by substantially lower EU sugar prices. The impact on profitability, combined with a higher UK beet price, was partly mitigated by the focus on the performance improvement programme which has been embraced by all of the sugar businesses and which delivered good results. A small operating loss of £3 million was sustained but a small profit for the full year is expected.

ABF’s Grocery business delivered an adjusted operating profit 4% ahead of last year at £128 million in the first half despite a revenue decline of 4% to £1.58 billion, largely due to commodity price deflation.

“Primark’s performance was driven by significant expansion of selling space and superior trading by the stores opened in the last 12 months and plans for its entry into the north-east of the US are well advanced,” says George Weston, chief executive of Associated British Foods.