BUSINESS WEEK - Food, glorious food.
Despite the foot-and-mouth crisis, ABF looks likely to emerge unscathed as it unveils interims
Food and retail group Associated British Foods says it is confident that it will escape the financial fallout of the foot-and-mouth crisis as it prepares to unveil interim results next week.
Although ABF has a primary foods and agriculture branch and a groceries sector, a spokesman said that it is not experiencing difficulties in the short term because its products are not dairy related.
According to the spokesman, the crisis has not had a major effect on ABF’s business.
‘The animal-feeds side is affected,’ he said, ‘but it is a relatively small part of our business.
The overall impact was relatively small.’
The spokesman added: ‘The crisis doesn’t affect the food side of our business,’ explaining that the company’s food business focuses on grain, seed and fish products.
But he said ABF did see some opportunities arising from the crisis. He pointed to a decline in meat output as likely to lead to an increase in the demand for fish.
On animal feed, he said the crisis will make farmers more wary about whom they buy it from.
‘Clearly it will put a focus on customers looking for assured feeds, such as ours,’ he said. Farmers, he added, may place less attention on price and look to purchase animal feed from firms with a proven track record.
The spokesman, however, said the overall outcome of the crisis and how it will affect the business are unknown. ‘The extent to which the foot-and-mouth crisis affects us is clearly an issue of how long it lasts.’
ABF has had an active 2001. In March, it was revealed that ABF’s subsidiary, Primark, will take the majority of the redeveloped Sauchiehall Centre in Glasgow as a new outlet, the first in the city to be opened by the fashion retailer.
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In January, it announced it will merge AB Ingredients, Kingsgate Food Ingredients and the industrial divisions of Nelsons of Aintree to form a food technology arm, ABITEC Group.
Although ABF’s share price has increased over the last six months, it has dropped 5% in the last month.
The company, whose market capitalisation was #3.523bn at the time of press, entered the FTSE-100 in December following an annual review of the index.
Despite falling consumer confidence and the UK autumn crises, ABF told its shareholders in its annual general meeting in December that its overall budgets are ‘in line with expectations’.
Chartered accountant John Bason has been heading the company’s finances since May 1999. Previously, he worked as finance director for Bunzl and McVite’s group and was investment manager at Lloyds Bank.
Bason began his career at Ernst & Young.
More details can be found at www.abf.co.uk
Snapshot
Annual results to September 16, 2000
Group turnover: #4.4bn
Operating costs: #4.0bn
Pre-tax profits: #383m
Executive directors: Harold Bailey, chairman, appointed January 1979; Peter Jackson, chief executive, appointed November 1992; John Bason, FD, appointed May 1999
Auditor: KPMG Audit
Company profile: Associated British Foods began life in 1935 as an association of seven bakery subsidiaries. It became famous in the 1930s when it introduced sliced bread. It is now made up of five businesses that trade worldwide, including grocery, retail and primary foods.
