UK food processor Premier Foods has reported that its underlying business sales increased by 1.1% to £757.1 million in the six months to 30 June 2012, an increase of £8.0 million compared to the prior year, and that underlying business trading profit increased by 3.2% to £53.2 million. As Premier Foods is undergoing a period of substantial restructuring and major disposal of assets to reduce debt, the group is focusing on its underlying business performance.

Underlying business excludes the results of completed business disposals as at 30 June 2012, Milling (sales only), and specific material items in 2011 and 2012 including pension credits, commercial adjustments and a non-core, discrete contract loss.

Sales at the Grocery division increased by 2.5% to £504.0 million but fell by 1.7% to £253.1 million at the Bread division.

Grocery divisional contribution to trading profit decreased by £4.4 million to £95.5 million in the first half of the year, owing to an increase in consumer marketing expenditure of £8.0 milion and higher promotional investment. The Bread division contribution declined £8.2 million to £22.5 million due to lower market volumes, increased promotional activity in a competitive environment and higher net costs to serve in the supply chain. The divisional contribution, the measure which the group is now using for reporting divisional performance, strips out all costs previously identified as Group & Corporate costs and other selling, general and administrative costs. The Grocery and Bread divisiional performances were offset by strong progress in the SG&A cost base, as costs reduced by £14.3 million.

“I’m pleased with the progress we are making to stabilise the business, re-focus the portfolio and invest in our future growth. Our strategy of focusing on our Power Brands is starting to gain traction,” comments Michael Clarke, chief executive of Premier Foods. “Power Brand sales were up 2% and sales of Grocery Power Brands increased by a healthy 4.9%, reflecting consistent improvement in market shares. Trading profit increased 3.2%, in line with our expectations.”

Plans to simplify the business and drive further efficiency and effectiveness are proceeding ahead of plan and Premier Foods will now deliver the previously announced £40 million savings by the end of 2012 – a year ahead of schedule. Michael Clarke adds: “As we continue our divestment programme, we plan to take further costs out of the business. We remain cautious given the current economic and trading environment and our full year expectations remain unchanged.”

The latest supermarket share figures from Kantar Worldpanel in Ireland for the 12 weeks ending 8 July 2012 show the grocery market has fallen by 1.3% compared with the same period last year, the steepest decline since August 2010.

Mark Thomson, business unit director at Kantar Worldpanel, explains: “The economic situation has been tough in Ireland throughout 2012, and consequently consumers have been looking to control their spend at the weekly shop. Shoppers have spent Eur26.8 million less at the tills than they did during this period last year as household budgets remain squeezed. This has also resulted in a 1.9% rise in sales of own label products as consumers try to control their weekly spend. This trend is bolstered by the strong growth of discount retailers who predominately stock their own range of brands.”

He continues: “Aldi and Lidl now have a combined share of 12.2% and are the big winners from austerity shopping, with respective growth rates of 22.5% and 3.4%. Tesco has also performed strongly, extending its market-leading share to 28.7% this quarter. This has been driven largely by good performance across key areas of the store such as fresh and chilled products.”

Despite ongoing pressures on the grocery market and Ireland’s early exit from the Euro 2012 championships, shopper spend on alcohol was up 3.6% over the latest period with discounters seeing the biggest jump in sales.

Grocery inflation stands at 2.7% for the 12 week period ending 8th July 2012, up from 2.6% in the previous period but significantly below the 3.8% seen in July 2011.

Latest research from Mintel reveals that for the first time, in 2011, the proportion of own label new product development (NPD) overtook branded in the UK. Historically, the proportion of new product development within food and non-alcoholic drinks has been higher for brands than for private labels. While brands held a 55% share of total NPD in 2010, the balance tipped in 2011 in favour of own labels as they accounted for 54% of NPD, compared to 46% for brands.

Today, some 57% of consumers think that own label products have improved in taste and quality, while 52% actually prefer them to brands in some cases. Furthermore, some 82% of adults think that own label products provide value for money, compared to just 16% for brands.

Today, some 80% of shoppers buy own label products (compared to 89% of consumers who buy branded goods), and retailers’ own products look set for further growth in 2012 as consumers expect to buy more of them. What is more, as many as 20% of those who buy branded products are set to buy less in the coming year.

Chris Wisson, senior food Analyst at Mintel, comments: “While there are signs that pressure on consumer budgets is slightly easing, 2012 looks set to see the majority of adults remaining watchful and discerning when shopping. Our research suggests that on balance, consumers expect to buy more standard and value own label foods while cutting back on brands.”

Mintel’s research reveals that the market for own label food and drink reached £37 billion in 2011, a 24% increase since 2006. This growth has come at a slightly faster rate in relation to the wider market, which grew by 23% over the same period. The own label market is expected to show similar growth trends in the coming years and is projected to reach £46 billion by 2016.

Today, 69% of British shoppers buy economy own label food and drink products. While there are signs of the recession easing somewhat, its continued impact is still being felt by consumers. Indeed, just 6% of adults who currently buy economy own label products expect to reduce their usage in the coming year, while one in eight (18%) current users expect to buy more in the year ahead.

Premium own labels have also fared well in recent years despite budgetary pressures and today are bought by 71% of UK consumers. Growth also looks set to continue in this segment, with 27% of adults expecting to buy more of these products in 2012 and only 12% to cut back.

The progress of own labels is such that over half (52%) of adults prefer the taste of own label products to branded equivalents in some cases, suggesting that they are increasingly becoming brands in their own right. However, despite over half of adults thinking that own label products have improved in taste and quality, 58% of adults still say that for some foods, only brands will suffice, with premium products in particular offering brands a safe haven.

UK consumers traditionally associate a wider range of positive attributes with brands than own labels, particularly being trustworthy (52%), traditional (51%) and authentic (44%), while just 2% of adults think that they are bland. However, own labels come to the fore for being family-friendly (45% versus 28% for brands) and, in particular, offering value for money (82% versus just 16% for brands). The most likely users to maintain their usage and support the own label market are men (46%), over-55s (49%), retirees (54%) and, surprisingly, ABs (48%) and households with an income of £25,000-49,999 (50%).

“Times have changed and there is no longer a perception about own label equating to lower quality. Our research shows that many affluent consumers do not necessarily dismiss own label products out of hand, but they appear to in fact be keen users in certain categories. The increasing credibility of private label products which, crucially, often undercut brands on price is a warning for brands who are under increasing pressure from consumers who are becoming more open to the idea of buying own label groceries,” Chris Wisson concludes.

Buoyed by strong performances from its sugar business and its Primark retail arm, Associated British Foods has reported a 3% rise in profit before tax to £329 million on group revenue up 11% to £5.77 billion for the 24 weeks ended March 3rd 2012. AB Sugar increased revenue by 17% to £1.2 billion and operating profit by 59% to £172 million over the previous year. This was driven by a strong increase in the UK, further improvement in Spain and a better performance from Illovo.

In the UK, sugar production for the full year is expected to be 1.3 million tonnes, compared to just under 1.0 million tonnes last year which fell short of sales quota. British Sugar’s interim profit was well ahead of last year reflecting an excellent sugar beet campaign, strong factory performance and higher EU prices.

ABF’s grocery revenue increased by 4% to £1.81 billion but operating profit fell by 31% to £75 million, primarily due to restructuring costs at George Weston Foods in Australia and Allied Bakeries in the UK, margin declines at Allied Bakeries and higher than expected costs of operating the Castlemaine meat factory in Australia.

Allied Bakeries is continuing to roll out the largest capital development programme within the UK bakery industry to improve manufacturing efficiency and upgrade product quality. Construction of the new bread plant and bulk handling at the Stockport bakery is well under way and due to begin commissioning in June. A rationalisation charge has been taken for the closure of two smaller bakeries and the cost of further overhead reduction.

Ingredients revenue increased by 2% to £538 million during the first half but operating profit declined by 42% to £18 million as the challenges experienced by the yeast and bakery ingredients business, seen particularly in the second half of last year, continued. Operating profit was adversely affected in a number of regions by input cost pressures, increased competition and volume weakness. The performance in Europe was adversely affected by increased competition which has made price increases to recover higher input costs difficult to achieve. Bakery ingredients in Spain continued to grow and commissioning of a new plant in Cordoba is expected at the end of the financial year. A rationalisation charge has been taken for a reduction in overhead in the European region.

Primark achieved strong first half revenue growth of 15% to reach sales of £1.62 billion but operating profit rose by a more modest 2% to £154 million.

Looking ahead to the second half of the year, AB Sugar’s investment over recent years, its focus on maximising capacity utilisation and operational efficiency and the strength of regional sugar prices, are expected to drive the full year profit for sugar well ahead of last year. This, together with solid profit growth from Primark in the second half, is expected to more than offset the lower profit in grocery and ingredients.

Kraft Foods’ high-growth global snacks business, which will be separated from its North American grocery business later in the year, will be called Modelez International. The North American grocery company will become Kraft Foods Group, retaining the Kraft brand for its corporate identity and as the brand for many of its consumer products. As a result, the global snacks company will require a new name when it launches later this year.

Mondelez is a newly coined word that means ‘delicious world’. It is a combination of the word monde, deriving from the Latin word for world, and delez, a fanciful expression of delicious. In addition, International captures the global nature of the business. Mondelez International will become a $35-billion business with 80% of its sales outside North Americawhen it comes into being before the end of 2012.

“The Kraft brand is a perfect fit for the North American grocery business and gives it a wonderful platform on which to build an exciting future,” said chairman and chief executive Irene Rosenfeld. “For the new global snacks company, we wanted to find a new name that could serve as an umbrella for our iconic brands, reinforce the truly global nature of this business and build on our higher purpose – to ‘make today delicious.’ Mondelez perfectly captures the idea of a ‘delicious world’ and will serve as a solid foundation for the strong relationships we want to create with our consumers, customers, employees and shareholders.”

Last year, Kraft Foods invited employees from around the world to suggest names for the new global snacks company. As part of this co-creation process, more than 1,000 employees participated, submitting more than 1,700 names for consideration. Mondelez International was inspired by separate suggestions from two employees, one in Europe and another in North America.

Premier Foods has reported a 29.3% drop in trading profit for ongoing business to £173.7 million for 2011 on sales down 3.4% to £1.81 billion. The UK food group has been disposing of assets to reduce its debt mountain. The sales of the Meat-free, Canned grocery and Brookes Avana businesses realised total net proceeds of £394 million and helped to cut net debt to £995.1 million at the 2011 year end.

Sales in the group’s Grocery division decreased by 7.4% to £1.10 billion during 2011 and trading profit declined by 19.1% to £170.3 million. Total sales for the Bread division increased 3.4% in 2011 to £711.3 million but trading profit collapsed from £35.3 million in 2010 to £3.4 million. Hovis bread branded market share was broadly flat during the year, while non-branded volumes were lower, partly as a result of a contract loss.

Michael Clarke, chief executive of Premier Foods, comments: “2011 was clearly a challenging year for Premier Foods. Like many others in the industry, we felt the impact of significant commodity inflation and an unprecedented decline in consumer spending. Unfortunately,our price increases were not able to fully recover higher costs and were largely negated by higher promotional spending which affected margins. In addition, as consumers looked for greater value, we were unable to maintain demand for our brands due to reduced marketing investment. Retail customer support for our brands consequently declined in favour of our competitors and own label, a situation that was exacerbated by the effect of customer disputes.”

He continues: “Despite its significant scale, the group has been unable to fully exploit revenue and cost synergies. The business remains complex with insufficient focus and has additionally suffered from a lack of investment behind its brands and a short-term, tactical approach to trading. The need to service significant debt has compounded these challenges.”

Premier Foods has just successfully negotiated a re-financing of the business with banking facilities of £1.4 billion extended to June 2016 and banking covenants re-set to support the new management team’s strategic plan for turning the business around.

Premier Foods’ new growth plan entails concentrating marketing investment behind eight ‘Power Brands’. This investment will double in 2012 with sustainable increases planned in subsequent years. Premier Foods will also focus on building collaborative relationships with key customers to drive mutual growth, while targeting gross 4% year on year supply chain savings and doubling of overhead savings to more than £40 million by 2013.

However, the consumer environment in the UK remains challenging. “Consumers will continue to focus on value and convenience; and competition will again be intense,” Michael Clarke points out. “There is no doubt that we will need to work hard to make our brands stand out. Nevertheless, our performance thus far in 2012 is in line with our expectations. I’m convinced we have the right team to turn this business around and I am very positive about our future.”

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An increasing number of consumers in the UK are now planning before going out to do their food and grocery shopping, compared to three years ago, according to the latest IGD shopper research. Nearly seven in ten shoppers (67%) plan most of their food and grocery shopping before they even get to a store, up from 47% in 2008.

Consumers have also increased their shopping frequency: with half of them (49%) making three or more trips a week to their supermarkets, compared to 39% in 2009.

“Most of us are facing stagnant wage increases but rising costs, such as public transport or fuel prices. As a result, shoppers are investing more of their time in order to secure the best value when buying their food and groceries,” points out Joanne Denney-Finch, chief executive of IGD.

She adds: “They are trying to manage their budgets by making more supermarket trips, but aiming to buy only what they need. By making more frequent visits they are topping up when required and also hoping to secure the best promotions, stocking up when they see ones that appeal to them.”

UK consumers are also doing their main grocery shop less often as other forms of shopping, such as online or convenience stores, increase in popularity.

UK food group Premier Foods has announced changes to its leadership team to strengthen focus on the company’s renewed growth plan, under new chief executive Michael Clarke. In the new structure, commercial leadership responsibilities will be split between the grocery and newly configured bakery businesses with the creation of two new group executive roles of managing director reporting directly to Michael Clarke. Following the creation of this new structure, the role of chief operating officer will disappear. Consequently, Tim Kelly, executive director and chief operating officer will leave Premier Foods following a short handover.

Iwan Williams is taking charge of the group’s £1.1 billion bread, cake, milling and Brookes Avana businesses. Iwan Williams has a wealth of general management and marketing experience gained through previous roles including president of McCormicks Europe, Middle East and Africa and strategic marketing director of Coca- Cola, Asia Pacific. His earlier career included time with SC Johnson Wax and Cadbury Schweppes.

Graham Hunter will join the company early in 2012 to lead Premier Foods’ £1.0 billion grocery business.  He joins from 2 Sisters Food Group. This company acquired Northern Foods earlier in the year where Graham Hunter was managing director of a number of the company’s branded businesses, including Fox’s Biscuits and Goodfella’s Pizza. His earlier career included general management and marketing roles with Jacob’s Bakery and Mars.

Kraft Foods intends to spin-off of its North American grocery business to shareholders. The move will create two independent public companies – a high-growth global snacks business with estimated revenue of about $32 billion and a high-margin North American grocery business with estimated revenue of approximately $16 billion. The target is to launch the new companies before year-end 2012.

Over the last several years, Kraft Foods has transformed its portfolio by expanding geographically and by building its presence in the fast-growing snacking category. A series of strategic acquisitions, notably of LU biscuit from Danone and of Cadbury, together with the strong organic growth of its ‘power brands’, have made Kraft Foods the world’s leading snacks company. At the same time, the company has continued to invest in product quality, marketing and innovation behind its iconic North American brands, while implementing a series of cost management initiatives.

Having successfully executed its transformation plan, and 18 months into the Cadbury integration, the company has, in fact, built a global snacking platform and a North American grocery business that now differ in their future strategic priorities, growth profiles and operational focus.

Kraft Foods’ snacks business is focused largely on capitalising on global consumer snacking trends, building its strength in fast-growing developing markets and in instant consumption channels. The North American grocery business is investing to grow revenue in line with its categories in traditional grocery channels through product innovation and world-class marketing, while driving superior margins and cash flows.

Irene Rosenfeld, chairman and chief executive of Kraft Foods.

Chairman and chief executive Irene Rosenfeld explains: “We have built two strong, but distinct, portfolios. Our strategic actions have put us in a position to create two great companies, each with the leadership, resources and strong market positions to realize their full potential. The next phase of our development recognizes the distinct priorities within our portfolio. The global snacks business has tremendous opportunities for growth as consumer demand for snacks increases around the world. The North American grocery business has a remarkable set of iconic brands, industry-leading margins, and the clear ability to generate significant cash flow.”

Global snacks will consist of the current Kraft Foods Europe and Developing Markets units as well as the North American snacks and confectionery businesses. As an independent company, global snacks would have estimated revenues of approximately $32 billion and a strong growth profile across numerous fast-growing, attractive markets. Approximately 75 percent of revenues would be from snacks around the world, and approximately 42 percent would come from developing markets, including a diversified presence in numerous highly attractive emerging markets. The business would have a strong presence in the fast-growing and high-margin instant consumption channel. The non-snacks portion of the portfolio would consist primarily of powdered beverages and coffee, which have a strong growth and margin profile in developing markets andEurope. Key brands would include Oreo and LU biscuits, Cadbury and Milka chocolates, Trident gum, Jacobs coffee,and Tang powdered beverages.

The North American grocery business would consist of the current US Beverages, Cheese, Convenient Meals and Grocery segments and the non-snack categories inCanadaand Food Service. With approximately $16 billion in estimated revenue, this business would be one of the largest food and beverage companies inNorth America. Its portfolio would include many of the most popular food brands on the continent, with leadership positions in virtually every category in which it competes. ey brands would include Kraft macaroni and cheese, Oscar Mayer meats, Philadelphiacream cheese, Maxwell House coffee,CapriSun beverages, Jell-O desserts and Miracle Whip salad dressing.

Associated British Foods has achieved a 5% rise in adjusted operating profit to £390m on group revenue ahead by 9% to £5.21b in the 24 weeks to March 5th 2011 as four of its five business segments improved profitability. Group profit before tax declined slightly from £320m in the first half of 2010 to £319m.

A feature of the first half of the current financial year has been the very large and continued increase in the price of a number of commodities which impacted on the group’s three food businesses – sugar, grocery and ingredients.

The rise in the world sugar price has benefited the sugar operations. Sugar profits in the first half were 27% higher at £108m on revenue up 10% to £1.02b with a substantial improvement in the operations in Spain and China. While world prices are expected to continue for the rest of this year but profit for the sugar businesses will be held back in the second half by the lower volumes produced. The damage to the UK sugar beet crop during the severe winter weather is expected to result in a net profit reduction of some £20m in the full year at British Sugar.

George Weston, chief executive of Associated British Foods.

In grocery, the impact of higher input costs on profit were offset by a combination of efficiency savings, brand and product development, and price increases. Grocery revenue increased by 8% to £1.73b and profit rose by 17% to £111m benefiting from a much reduced level of provisioning for the cost of manufacturing reorganisation. Twinings Ovaltine and the UK businesses performed well but George Weston Foods in Australia disappointed.

Profit from the ingredients businesses was lower than last year as a result of higher molasses prices and the cost of commissioning the new yeast extracts plant in China. Revenue increased by 7% to £544m but operating profit declined by 38% to £29m.

The Primark retail business and the agriculture division were the other two segments to improve profits.

“The breadth, diversity and resilience of our businesses have enabled the group to deliver good growth. We have made further substantial capital investment for the longer-term development of the group,” says George Weston, chief executive of Associated British Foods.

Premier Foods, the UK’s largest food producer, has reported a pre-tax operating loss of £98m, against a profit of £42m in 2009, on a continuing basis for 2010 after a £125m goodwill impairment at its Brookes Avana own label bakery and prepared food business. Group turnover dipped by 3.5% to £ 2.57b due to lower non branded sales. Although volume was up 3.1%, the value of branded sales was relatively flat at £1.67b, down 0.3% on 2009.

Group trading profit edged up 0.6% to £311m, as both the grocery division and the Hovis business recorded improved trading profit but trading profit fell by £15m at Brookes Avana. Indeed, the most dramatic effect of last year’s pricing and commodity inflation was reflected in plunge in profitability at Brookes Avana. Premier is currently talking constructively with UK retailer Marks & Spencer to agree new product ranges and revised pricing and supply arrangements which will be able to return the business to profitability in 2011.

The debt mountain was reduced by £103m to £1.26b during the year but the proceeds from the recently agreed disposals of Premier’s canning and meat-free businesses will further cut pro forma net debt below £900m.

Outlook

Robert Schofield, chief executive of Premier Foods.

Promotional activity in its retail markets increased significantly in 2010 but Premier does not expect it to continue to escalate at the same rate in 2011. Commodity inflation has been running at mid single digit percentages, requiring Premier to increase prices for its products. At this level, the UK food group believes that inflation is manageable.

Premier’s focus in 2011 will be to continue to take branded market volume share, while growing its percentage of grocery branded sales from new and improved products as its innovation pipeline matures. It will also continue to drive for efficiencies; and to generate at least £80m of recurring cash flow.

“Our business has proved resilient, with branded volume market share growth, increased margin from procurement and manufacturing efficiency and lower operating expenses. There is more to do in each of these areas and we have aligned the organisational structure behind the strategy of growing our brands. We would expect our focus to enable the group to show progress from our new base after the disposals without a further deterioration in the consumer environment,” comments Robert Schofield, chief executive of Premier Foods.

Nearly a third of UK shoppers want food and grocery retailers and manufacturers to focus on reducing waste. IGD consumer research shows 29% of shoppers think reducing waste should be one of the main sustainability priorities for the industry.

The findings come as 33 leading food and grocery companies have announced they are voluntarily committing to prevent 75,000 tonnes of waste being created by the end of 2012. All signatories are IGD members and leading retailers, manufacturers, wholesalers and food service operators. They have signed up to the target to totally remove this volume of waste from their supply chains.

The industry has made great strides in recovering waste, rather than disposing of it. To drive this progress even further the companies have pledged to meet an extra target. They have challenged themselves to divert a further 150,000 tonnes of waste from disposal, mainly from landfill and sewerage, to more productive outputs such as anaerobic digestion.

Joanne Denney-Finch, chief executive of IGD.

“Food and grocery businesses are striving continually to reduce waste from their operations. This has resulted in the majority of the product and packaging waste from their supply chain being recycled or recovered, rather than disposed of,” says Joanne Denney-Finch, chief executive of IGD. “The industry is now strengthening further its emphasis on supply chain waste prevention. This includes not producing the waste in the first place or redistributing it to alternative markets and charities, such as Fareshare.”

IGD members which have signed up to the two waste targets include: Associated British Foods, Bakkavor, Coca-Cola Enterprises, Dairy Crest, Gerber Juice Company, H J Heinz, Kraft Foods, Mars Chocolate UK, Molson Coors Brewing, Muller Dairy (UK), Nestle UK, Northern Foods, PepsiCo UK & Ireland, Robert Wiseman Dairies, Unilever UK, United Biscuits, VION Food UK and Warburtons.

A new guide to help UK food businesses communicate with consumers in a clear and consistent way about achieving a healthy balanced diet is being published by IGD, the international food and grocery experts. The Best practice guide to communicating to consumers about a healthy balanced diet has been developed to ensure information provided is relevant, appropriate and in line with government messages about healthy eating, such as in the Change4life campaign.

There is a great deal of conflicting information available on nutrition and health, particularly on the internet, and this can lead to confusion. Some of the fad or ‘celebrity diets’, for example, have suggested limiting your intake of starchy foods, such as bread and pasta. But the Government’s eatwell plate says they should make up a third of your diet.

The guide offers a step-by-step checklist to develop an effective communications strategy, such as:

* Know who your target consumers are, eg gender, age, ethnicity;

* Ensure the language and tone suit the outlet and target audience, eg using short and positive sentences;

* Select the optimum communication route(s), eg on-pack, TV/radio, cookery demonstrations;

* Confirm the messages and claims comply with labelling and advertising regulations (both UK and European legislation).

Joanne Denney-Finch, IGD chief executive.

“What we eat is one of the important factors in determining good health, so it is crucial to encourage people to adopt a healthy and balanced diet,” points out Joanne Denney-Finch, IGD chief executive. “The most effective messages in influencing healthier choices are those that are easy to understand and are used consistently, such as the five-a-day campaign.”

She adds: “Consumers are bombarded with a great deal of nutritional information, a lot of which is conflicting – leading to much confusion. The IGD guide has been developed to ensure communication with consumers is consistent with government advice and provides ideas that are simple, practical and helpful.”

The Best practice guide can be downloaded from: www.igd.com/healthybalanceddiet.

Associated British Foods has reported a 10% increase in revenue to £10.2b and adjusted operating profit up by 26% to £909m for 2010. With 56% of sales and 46% of operating profit generated outside the UK, the translated results of overseas businesses benefited from the weakness of sterling. At constant currency, and adjusted for the impact of acquisitions and disposals, group revenue increased by 6% but profit was little affected and was still 25% ahead. Reported operating profit was up 31% to £819m and profit before tax advanced 54% to £763m.

Revenue exceeded £10b for the first time with strong underlying trading from all five of the group’s business segments – grocery, sugar, ingredients, agriculture and retail (Primark). Grocery margins improved, there was an excellent result for sugar and an outstanding performance from Primark.

Grocery revenue increased by 7% to £3.4b driven mainly by the benefit of currency translation on the sales of George Weston Foods in Australia. At constant currency, sales were level with last year. Adjusted operating profit rose from £191m to £229m.

George Weston, chief executive of Associated British Foods.

The results from sugar improved substantially with revenue ahead by 32% to £1.94b primarily as a result of a full year’s sales from Azucarera, acquired in April 2009, but also with good growth in the UK and from cane sugar in China. This revenue growth, together with an improvement in UK and Chinese margins, drove a profit increase of 43% to £240m. Ingredients achieved a revenue increase of 8% over last year to £1.07b and operating profit rose by 18% to £104m.

“This year’s outstanding results represent a step change for the group. A number of major projects will be completed over the coming year which will underpin future profit delivery and provide a platform for further growth. Opportunities for further attractive investment are plentiful and the group has the financial capacity to exploit them,” says George Weston, chief executive of Associated British Foods.