Sugar propels growth at Associated British Foods

Associated British Foods plc reports its group revenue is up 13%. Its sugar developments saw a £100m ($199.12 million) investment in Mali announced by Illovo and an investment in beet sugar in north east China with 11 factories.

Sugar revenues were 12% lower than last year largely because, as previously reported, the equivalent period last year benefited from the early shipment of export sales from the UK.

Profit in the UK will be lower than last year, mainly as a result of further effects of the EU sugar regime restructuring, but also higher energy costs and a smaller crop. Poland has had a record crop but profit will also suffer from regime changes.

The recent strengthening of the euro will benefit both businesses. Sugar production in southern Africa will be lower than expected as high rainfall levels have made it impossible to harvest all available cane. This has particularly affected South Africa and Zambia.

Meanwhile, Illovo has announced an investment of £100m for the construction, in Mali, of a new sugar mill with an ethanol and electricity co-generation unit, in which it will have a 70% stake.

It will manage the agricultural development to produce the sugar cane required to supply this new facility. A total of 11 sugar beet factories have now been acquired in north east China and the campaign is progressing well.

Grocery revenue was 15% ahead with good sales growth from Twinings Ovaltine and a continuation of the improvement seen in the second half last year from Allied Bakeries.

Wheat prices remain high both in the UK and Australia but have now been successfully recovered through pricing.

Ingredients revenue was 16% ahead. The company is investing £50m in additional yeast and yeast extract capacity in northeast China and £17m in enzyme capacity expansion in Finland.