Associated British Foods profits rise but challenging times ahead

Associated British Foods (ABF) has announced a strong set of results but has warned of challenging trading conditions.

In the half-yearly period to 1 March, pre-tax profits rose to £282 million, compared to £262 million a year ago.

The company said the latest results were on track but added that uncertainty lay ahead as energy and commodity prices were on the increase.

Following the announcement, the stock fell and ended down 2% at 871 pence.

Andrew Wood, an analyst at Sanford Bernstein, said although we are seeing improved operating performance from ABF in the first half of 2008, we expect the stock to react negatively to the margin development, which came in well below expectations.

ABF is the owner of fashion retailer, Primark, who reported better-than-expected Christmas sales. Sales increased 26% in the 16 weeks to January 5.

Last October, Primark overtook George at Asda as the UK’s most popular value clothing retailer.

ABF is also the owner of the Silver Spoon sugar brand and said sugar profits from the EU operations suffered from the well-documented impact of regime reform and adverse weather prevented the realisation of the full potential of the crop.

ABF is a multi-national food, ingredients and retail group and has a workforce of more than 75,000 and operates in almost 50 countries.

Story link: Associated British Foods profits rise but challenging times ahead