Sugar provides sweet profit for Associated British Foods

10 September 2012

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10 September 2012 | Adam Leach

Associated British Foods has seen increased profits from sugar divisions in Europe and Africa, but these will be balanced by falls in China.

In a trading update published today, the company explained that its revenue from the commodity in Africa, and particularly the EU, for the second half of this year is “well ahead” of last year. It attributed the increase to higher levels of demand in the regions.

Further, it explained an “absence of weather-related challenges” meant it was able to produce higher volumes. It revealed that in Britain it has produced 1.3 million tonnes of sugar, 300,000 tonnes more than last year. An increase in production in Spain has further strengthened EU operations.

Although production in China remained steady at around 405,000 tonnes, the company’s profit from the region is expected to be “considerably lower” as a result of a lessening of domestic demand, which has caused prices to drop. The company also saw its profit margins in the pig and poultry feed market reduce.

High cotton prices – and the decision not to pass these on to customers -also saw profit margins at its clothing retail operation, which includes high street store Primark, squeezed. But it has seen these margins increase in the second half of this year as cotton prices eased.

 

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