Sugar slump leaves AB Foods with bitter taste

Associated British Foods posted a 2 per cent fall in annual earnings, as growth at it Primark fashion chain, grocery, agriculture and ingredients businesses was more than offset by a slump in its sugar operation and currency moves.

Opening of the new Primark store at Trinity Leeds Shopping Centre.(SH1001/40g) 3rd December 2013.Picture by Simon Hulme

The group also cautioned that it expected currency pressures, notably the weakening of the euro and emerging market currencies versus the US dollar and sterling, to lead to a “modest decline” in adjusted earnings in the 2015-16 year.

AB Foods said adjusted earnings per share were 102 pence in the year to September 12, down from 104.1 pence last year.

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The firm had said in September its full year earnings would show a “modest decline” on the previous year’s outcome and analysts had on average forecast adjusted EPS of 98.4 pence.

Currency movements had a negative effect on the translation of overseas results but also, and increasingly as the year progressed, on transactional exposures.

At current rates AB Foods estimates the translation impact in 2015-16 would be similar to 2014-15’s £31m, while the transactional impact would be greater.

Group revenue fell 1 percent to £12.8bn, while adjusted profit before tax fell 6 perc ent to £1.034bn. The dividend was increased 3 per cent to 35 pence.

AB Foods said that after three years of large profit declines for AB Sugar, it expected greater stability in 2015-16 profit ahead of EU quota removal in 2017.

It said the good underlying trading achieved by its businesses in the 2014-15 year was expected to continue.