ABF improves across the board

Operating profits in the grocery division leapt 53 per cent to £95m, as the restructuring of some of its core brands, including Ryvita, Twinings and Silver Spoon, combined with recovery in the UK bread and US oil markets to push margins 190 basis points higher, to 5.9 per cent.

And while sugar profits of £85m were marginally lower than some analysts had expected, that was still 39 per cent higher than a year earlier. Overall, profitability was driven by a substantial increase in Chinese sugar prices, as it recovered from softness seen there in early 2009. That more than made up for the effects of a drought on production, and in fact, full-year production is forecast to be 470,000 tonnes, well below ABF's 700,000-tonne capacity. Weather also caused problems in Africa and Spain, but UK yields were 9 per cent up over the year at 1.3m tonnes, despite the freezing winter.

Primark remains the icing on ABF's cake, though, and demand for its cheap and cheerful clothing shows no signs of waning. Like-for-like sales climbed 8 per cent, while investment in new stores across the UK and Europe took overall sales in the chain 19 per cent higher to £1.3bn. As well as openings in the UK, the group added stores in Germany, Portugal and Belgium, and plans to add another three to the 16 it already operates in Spain, which it said had put in an "exceptional performance" over the six months.

Broker Panmure Gordon expects adjusted pre-tax profits of £790m and EPS of 67.5p in the year to September (from £655m and 57.7p in 2009).

.

More analysis of company results