The firm issued its annual results for the period ending 14 September 2019, citing a 5% drop in AB Sugar revenues.
Operating profit for AB Sugar was well down, at £26m, as opposed to £123m the previous year. This highlighted an adjusted decrease in margins to 1.6% from 7.1% in 2018.
Chief executive George Watson said this fall was largely caused by the firm’s sugar-related performance in the first half of the year.
Poor crop
“Sugar prices were much lower this year and impacted our UK and Spanish businesses, while a poor crop reduced production and sales volumes in China,” he said.
“This decline resulted from a coincidence of a regional oversupply of sugar and the end of the EU sugar regime.”
Despite this, the firm stressed that the upturn in EU sugar cost margins, meant it expected an ongoing improvement over this coming year.
“Following the subsequent reduction in EU sugar supply, sugar prices have increased, and we look forward to a material increase in our sugar profit in the coming year,” he noted.
Cost reduction
“In the coming year, AB Sugar will benefit materially from the increase seen this year in EU sugar prices and from further cost reduction,” chairman Michael McLintock added.
For the wider firm, grocery revenues were 2% ahead of last year at constant currency, and growth in adjusted operating profit remained strong, at 10%.
ABF posted grocery revenues of £3.5bn, up from £3.4bn the previous year. Operating profit also rose to £380m, offset against £335m in 2018.
“We expect another year of strong profit and margin growth in Grocery, with Twinings Ovaltine in particular benefiting from a more efficient tea supply chain,” Watson confirmed.
Group revenues rose 2% to £15.8bn, with operating profit also rising 1% to £1.4bn. Profit before tax also rose 2% to around £1.4bn.
Meanwhile, last month ABF announced the appointment of Peter Watson as the new agriculture director at British Sugar.
