A trading update from Associated British Foods for the first 16 weeks of the current financial year, covering the period to January 2 2016, warns of lower revenues and profitability in line with lower commodity values and difficult exchange rates. Overall group revenues were up 3% in the period at constant currency rates, but 2% lower after currency factors.
The company reports that its Agriculture business - AB Agri – saw revenues affected by lower sugar beet feed volumes and continued low commodity prices over the four months.
The Sugar division saw some improvement in world sugar prices after five years of surplus, but this is unlikely to help returns in Europe this year. British Sugar expects the current UK beet campaign to produce just under 1.0 million tonnes of sugar, with a smaller contracted area and more typical beet yields than the previous season which resulted in 1.45m tonnes of sugar. The 2015/16 campaign has made good progress, with strong operating performance across all four factory sites. The plants are expected to complete beet processing by early February.
The Vivergo bioethanol plant near Hull, in which ABF is now the major shareholder, has benefited from better bioethanol values and its focus on maintaining an efficient and consistent operating performance. The company notes an improved outlook for bioethanol production this year.
In the ABF Food division, Allied Bakeries saw a “substantial” increase in sales volumes, although pricing and margins remain challenging.