Associated British Foods plc (ABF) has seen a 27% fall in sugar revenue at constant currency, according to the latest results.
Published in the group’s interim management statement for the 16 weeks to 4 January 2014, ABF said its sugar performance was “weaker than expected”, seeing a 28% decrease in actual rates.
As the market adjusts ahead of EU regime reform in 2017, lower sugar prices will result in a substantial reduction in profit from its sugar businesses, it said.
It added that the UK campaign was “progressing to plan”, while beet quality and sugar content were encouraging and all factories were “operating well”.
ABF predicted that sugar production for the current year would be 1.28m tonnes compared with last year’s 1.15m tonnes.
Grocery revenue at constant currency was 2% ahead of last year, but at actual rates was 1% below, largely as a result of a weaker Australian dollar, the company added.
Sales in its Grocery arm were in line with last year, while volumes and margins at Allied Bakeries were up despite continuing to face strong competition.
ABF reported a 1% increase in constant rates for the total group, while actual rates were level. A fall in net debt by £392m to £412m was also revealed.
Ingredients revenue at constant currency was 3% ahead of last year, but 2% lower at actual rates. In the statement, ABF said that in yeast and bakery ingredients, cost inflation in South America was successfully recovered, with improvement in volumes and margins in Brazil. Revenues in North America were ahead, driven by increased volumes, while profit at AB Mauri was improving.
The company said that, at ABF Ingredients, the new extrusions factory at Evansville in the US had been successfully commissioned, products had been approved by key customers and the factory was fully operational.
ABF concluded that, given the current strength of sterling, combined with revenue growth and margin improvement in grocery, and a lower interest charge, it continued to expect adjusted earnings per share for the current financial year to be similar to 2013.