Whilst its Primark clothing chain has faced considerable disruption during the pandemic, Associated British Foods (ABF) Grocery division has delivered another period of robust growth.
The unit’s total revenue increased 8% to £1.83bn over the 24 weeks to 27 February, with increased retail demand offsetting weaker foodservice sales as a result of the pandemic-related restrictions. Adjusted operating profit was up 6% to £199m, driven by its Twinings Ovaltine and UK grocery businesses.
Twinings and Ovaltine were said to have had a strong first half despite weaker demand in out-of-home channels. Twinings revenue was ahead of last year, driven by growth in herbal and fruit infusions with a particularly strong performance in France. Volumes continued to benefit from an increase in home consumption as a result of Covid-19, as well as new product launches. Meanwhile, Ovaltine delivered growth in its major markets with improved performance in Thailand and Brazil, further expansion in Switzerland and good progress in e-commerce and foodservice in China.
ABF’s Jordans, Dorset Cereals, Ryvita, Patak’s and Blue Dragon brands were all said to delivered growth as they benefited from international development and increases in consumer demand through the retail channel.
Consumer demand for home baking products in the UK continued and Silver Spoon was well ahead as a result. Revenue in Allied Bakeries was in line with last year and following the group’s decision last year to exit the Co-op contract, cost reductions have been delivered to mitigate the loss in contribution.
Sales at Acetum, ABF’s balsamic vinegar business in Modena, continued to progress as distribution gains and marketing increased the reach of the Mazzetti brand in many markets.
At ACH, its baking businesses, ACH Mexico, and Anthony’s Goods all continued to deliver profit growth. However, the profit contribution from Mazola declined due to higher commodity costs and reduced availability of corn oil in the US.
At George Weston Foods in Australia, ABF’s bakery business Tip Top continued to make good progress with both market share gains and tight cost control. New product launches and higher consumer demand in both the dips and vegetarian categories were said to have delivered substantially increased volumes at Yumi’s. However, total operating profit at George Weston Foods was lower with reduced volumes in the Don meat business as a result of the pandemic.
Revenues in ABF’s separate Sugar division edged up 1% to £763m on a constant currency basis. However, adjusted operating profit jumped from £12m to £66m, driven by Illovo, which benefited from increased domestic demand and higher prices. The group stated that all businesses had continued to deliver savings from its ongoing performance improvement programme.
NAM Implications:
- A good example of the benefits of product/brand spread…
- …along with geographical activities…
- …even in global lockdown.
- A pointer for others, longer-term?
