Interim figures from Associated British Foods (ABF) show growth for its Agriculture division, AB Agri, but a reverse for AB Sugar in the face of falling world sugar values.
AB Agri has reported an operating profit of £24 million on revenues of £615m in the six months ended March 3rd 2018, compared to £23m and £552m in the first half of 2017, respective increases of 4% and 11% as reported.
Revenues were driven both by increased finished feed volumes and higher prices in line with rising feed material costs. Compound feed volumes – the group owns the ABN monogastric feed brand – were up through better profitability in pigmeat production and growth in the consumption of poultry products. The larger sugar beet crop harvested for 2017/18 meant there was more beet pulp co-product for Trident Feeds to market, increasing its contribution to the division’s figures.
The company’s premix and starter feed business, now grouped under the Speciality Nutrition banner, “performed strongly with increased sales volumes and new customers”. Feed additive and micro-ingredient specialist AB Vista saw higher sales volumes in Europe and North America. There was “good sales progress” from new business ventures, particularly the Agrokorn speciality protein business acquired in early 2016.
AB Agri also reports profitability in its feed operations in China.
The company’s new anaerobic digestion (AD) plant, located near its ABN feed mill at Sherburn-in Elmet feed mill in Yorkshire, Yorkshire is now on-stream and operating near its 60,000 tonnes of blended green and food waste capacity. It is part of the Amur brand covering sales of AD products and services launched in July 2016
Frontier Agriculture, the arable marketing business jointly owned by ABF Holdings and Cargill, reports that profitability was “held back by low volatility and weakening grain prices”, limiting both merchanting and trading opportunities in the period. The business recently unveiled sharp increases in profitability and sales for its full 2016/17 year.
AB Sugar, the global sugar operation, saw adjusted operating profit drop 27% to £90m on revenues down 13% to £938m. “Significantly lower” EU prices adversely affected its UK and Spanish businesses, partially offset by the much larger UK crop and ongoing performance improvement across the group.
The end of the EU sugar regime and its sales quotas and export constraints in September 2017 saw an increased EU beet area, which, coupled with exceptional yields, increases sugar production and has pressured prices down towards world values. The EU is currently a net exporter of sugar. The availability has also seen an increase in ethanol manufacture from sugar, and lower ethanol prices, a factor in the closure of the group’s Vivergo wheat to bioethanol plant on Humberside in December. Vivergo restarted this month following the extended maintenance shutdown which allowed plant improvement work to take place.
Germains, the King’s Lynn-based specialist in seed treatment, coatings and enhancement, grew profitability and sales through new product development. The group is to support strong growth in the US horticulture market with investment in expanding the Germains facility at Gilroy in California.