ABF, which owns British Sugar and also has grocery, retailing, ingredients and agriculture interests, produced a 13% increase in adjusted profit before tax in the year to 14 September 2013.
This took profit before tax up to £1,096m, while group revenue rose by 9% to £13.3bn and net debt fell from £1,061m to £804m.
Lower profit in the sugar division was the result of lower European production and higher beet costs for British Sugar, said the company. Revenue from the sugar operations was level at £2,677m while the adjusted operating profit margin in this division was 16.2% (19.1% in 2012) with a 23.4% return on average capital employed, down from 26.5% in 2012.
Greater availability of sugar globally and an increase in competition meant that pricing for 2013-14 was lower, said the group’s annual report
A further reduction in profit from the group’s sugar division was expected next year as EU sugar prices fell and the market rapidly adjusted ahead of 2017 when EU sugar quotas will be abandoned.
“We have established British Sugar as one of the lowest cost sugar businesses in the world. Maintaining our dialogue with growers and strengthening our relationship with them will be necessary to build a sustainable and competitive sugar industry for the future,” said the report.
British Sugar produced 1.15m tonnes of sugar from the 2012-13 season, lower than the previous year’s 1.32m tonnes as a result of poor growing conditions during 2012 which led to lower beet yields and sugar recovery.
Crop yields in 2013-14 were expected to be slightly below average but sugar production was expected to at least achieve sales quota and to meet bioethanol requirements.
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