Associated British Foods expects first-half profits to be higher than last year, with a strong performance from most of its business sectors.
In a trading update, released ahead of the company’s first-half results, the group said that grocery profits had been boosted by its restructuring efforts and will be “well ahead” of last year, despite a charge of GBP19m (US$29.4m) related to continued reorganisation at Twinings.
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Although ABF did not provide any specific sales figures, it said a “strong” sales performance from its Ovaltine and Twinings brands and an increasing volume of branded sales at its Allied Bakeries business drove grocery earnings.
ABF added that Silver Spoon sales had benefited from an increased demand for home-baking products, while the Patak’s brand was supported through increased advertising and improved operational efficiencies.
In Australia, the group emphasised that the performance of its grocery business was bolstered by improved efficiency and the consolidation of manufacturing as well as the strength of the Australian dollar.
Having lapped forward buying issues, where the group was locked into prices above the market average, ABF said that the performance of its US edible oils business had improved. While volumes were up in the US, the company said that they remained “under pressure” in Mexico.
The group also revealed that its sugar and ingredients businesses were both up on last year, with a recovery in Chinese sugar and increased sales in Americas ingredients.
ABF’s second-quarter numbers will be released on 20 April.
