ABF’s first-quarter results impacted by poor sugar sales
Group revenue from continuing operations was boosted by the strengthening of the pound against ABF’s major trading currencies, other than the euro, for the 16 weeks ended January 6 2018. Sales from continuing operations at actual exchange rates rose 3%.
Grocery sales were up 4% at constant currency and 1% ahead of the same period last year at actual rates. This had been bolstered by good sales growth of its Twinings and Ovaltine tea brands.
The company also saw a strong performance overseas, with improved market share for its Mazola cooking oil in the US and improved margins for the George Weston Foods brand in Australia.
Reducing the loss
Volumes at Allied Bakeries remained strong and some progress had been made in reducing the loss for this financial year, said ABF. It forecast an improvement in grocery margin for the full year.
ABF’s ingredients business saw sales rise 4% compared with the previous year at constant currency, but down 1% on actual exchange rates.
The group continued to experience falling sales across its sugar business, experiencing a 12% drop at constant currency. Sugar revenues were 13% behind at actual exchange rates.
In its statement, ABF said: “A revenue and profit reduction greater than previously forecast is now expected for the full-year, primarily as a result of significantly lower EU sugar prices, which adversely affected our UK and Spanish businesses.”
‘Significantly lower EU sugar prices’
However, it expected sugar production in the EU during the 2017/18 financial year to be substantially higher than last year, because of high beet yields and increased crop area. Its full-year results would benefit from the end of EU sales quotas on sugar in September last year.
ABF added: “Other than the expected reduction in sugar revenue, sales growth was delivered by all of our businesses and their combined revenue was 6% ahead at constant currency.”
Meanwhile, speciality cake and bread manufacturer Finsbury Food Group has posted a 0.7% rise in sales in its pre-close trading statement, despite a fall in sales from its overseas operations.
