Associated British Foods (ABF), known for brands such as Kingsmill and Twinings, has reported a substantial increase in profits for the year ending 14 September. However, the company anticipates a significant impact on its performance due to a reduction in European sugar pricing from 2025.
In the last financial year, ABF’s adjusted pre-tax profits climbed by 33%, reaching £1.9 billion. The company also saw a 17% increase in its grocery adjusted operating profit. Grocery sales rose by 4%, reflecting improved margins alongside a boost in marketing investments.
The ingredients division of ABF experienced a 2% rise in sales, with a notable 12% growth in adjusted operating profit. This was largely driven by the performance of yeast and bakery ingredients. Additionally, ABF reported strong sales and profit figures for its sugar segment, surpassing the outcomes seen in 2023.
George Weston, Chief Executive of ABF, highlighted the positive contributions of their food businesses towards growth and profitability. He noted the benefits arising from reduced input costs and increased marketing expenditure, alongside robust commercial execution and product innovation.
Looking forward, ABF plans to maintain its sales momentum in the grocery sector by continuing to invest in marketing. The company also expects consistent growth in yeast and bakery ingredients alongside improved performance in specialty ingredients.
Nevertheless, the sugar segment is predicted to face challenges due to the expected decline in European sugar pricing in late 2024. This decline is anticipated to significantly affect the sugar business’s performance in 2025, with profits projected to fall within £50 million to £75 million.
Despite these challenges, ABF remains optimistic about its long-term prospects. The company plans to recover its profitability by 2026 with the aid of lower beet prices and a market rebalancing of supply and demand. Additionally, ABF is focused on strong cash flow generation and capital allocation directed towards growth opportunities and sustainability initiatives.
ABF has demonstrated robust financial growth over the past year, yet faces imminent challenges in its sugar segment due to anticipated reductions in European sugar pricing. The company remains committed to overcoming these hurdles through strategic investments and is confident in its ability to sustain long-term growth through disciplined financial management.
