A trading update from Associated British Foods covering the first 16 weeks of the current financial year shows revenues for its Agriculture (AB Agri) and Sugar (AB Sugar) divisions are up. But the group warns of increased operating costs are eroding margins in some of its businesses.
AB Agri’s revenue was £545 million in the September 19th 2021 – January 8th 2022 period, a 7% increase on the £507m in the same period of the previous year ahead of last year. The Group notes that the rise is due to higher selling prices, reflecting commodity and energy cost increases.
AB Sugar revenues grew by 12% to £609m (£545m), driven by stronger European sugar prices, better prices for the bioethanol made by British Sugar at its Wissington beet refinery and a better performance by its South African business.
European sugar prices have risen with low European sugar stocks against a background of strong world market prices. The company estimates that European sugar production for the 2021/22 campaign will increase with better beet yields.
UK sugar production for 2021/22 campaign is expected to be 1.04 million tonnes (0.9m tonnes in 2020/21) produced in the last campaign with higher yields more than offsetting the reduced growing area. British Sugar says preparations for the resumption of bioethanol at its wheat fuelled Vivergo biofuel plant near Hull are well advanced.
ABF says all its businesses are focused on mitigating the effects of significant cost input inflation, raw materials, commodities, supply chain and energy – particularly the latter.
“Our Grocery, Sugar, Ingredients and Agriculture businesses have seen an escalation in the cost of energy, logistics and commodities. We have been implementing plans to offset these through operational cost savings and, where necessary, the implementation of price increases.”
ABF Group revenues increased by 16% to £5.57 billion, (£4.80bn) with a large contribution from its Primark retail business which was negatively affected by the previous year’s coronavirus lockdowns.