AB Foods sees first-half profits increase

Feb 23 2010 by Iain Laing, The Journal

THE food company which is axing more than 260 jobs on Tyneside yesterday said it expected to see its first-half profits go up as it continues to grow its business this year.

Associated British Foods, which is shutting its Twinings tea plant in North Tyneside, said its results for the first six months of its financial year to February 27 would show strong sales and profits growth across its business, with brands such as Silver Spoon and Ovaltine leading the way.

Primark also produced strong trading, with Christmas sales beating the firm’s expectations.

The discount clothing brand is set for further UK expansion in the coming months, with stores planned for Chester, Bury and Blackburn.

Further outlets will be opened in the next financial year after the group bought 10 Bhs properties recently.

These will be located in Folkestone, Guildford, Harrogate, Winchester, Bournemouth, Perth, Worcester, Ilford, King’s Lynn and Scunthorpe.

Primark, which has 196 stores and 6.1 million sq ft of selling space, has also been expanding in its other European centres and the firm plans to open three new stores in Spain in the second half.

AB Foods said its grocery division had benefited from good results across its UK brands and a restructuring during last year which included the axing of the North Tyneside plant and cutting around 130 workers in Andover in Hampshire.

Rising demand for home bakery ingredients helped Silver Spoon, which also saw better profits after a rationalisation of its packaging plant.

Its Twinings Ovaltine business also experienced strong sales in the half year, driving profit growth.

AB Food said there were signs that the ethnic wholesale sector was stabilising.

Its Westmill Foods business – which supplies flour, rice, spices, sauces, edible oils and noodles – saw profits improve in the period although these have not recovered to levels seen two years ago.

Indian food brand Patak’s was aided by advertising campaigns and is expected to show year-on-year profits growth.

AB Foods said profits from its sugar division would be substantially ahead of last year, helped by strong European performance and a recovery in China, where prices have now risen to record levels.

The group’s agriculture division has been affected by the volatility in commodity prices, but all UK feeds except sugar beet are expected to show revenue growth.