ABF passes on price hikes
15 May, 2008
Associated British Foods, Britain's leading food producer, is suffering from commodity prices, whose prices are being squeezed up by the credit crunch allied with accelerating commodity inflation. Higher ingredient prices forced ABF to pass on costs of £300m to its customers. Worldwide food prices have zoomed by 83% over the last three years according to a New York University report for Chatham House.
ABF has countered by increasing prices. But the trouble, according to George Weston, ABF's boss, is that his customers include the big supermarket groups, which do not take kindly to price rises. He said customers are trading down from branded products to own label products. ABF managed to boost its pre-tax profits by 35% to £267m for the 24 weeks to 1 March, 2008. The grocery business saw profits up 17%, ingredients were up 18% and agriculture profit was up 23%.== Uniq cuts staff ==Uniq, the convenience food group which counts Marks & Spencer among its customers - it takes 27% of Uniq's sales - is cutting up to 300 jobs to recover its profitability. Uniq is working towards closing its factory at Paignton, Devon. It is also reducing its fixed cost base by around £11m a year from 2009 onwards. Sales for the first three months were up 0.8% against last year. Uniq is fighting to contain higher raw material prices by combining price rises with winning new business.== in demand ==Genus, the bull semen company, fell victim to profit-taking after making a third-quarter trading statement confirming the company is on track to hit full-year sales and profit targets. The dairy market is strong on the back of high milk prices and investment in dairy herds has boosted demand for bull semen. Genus reckons that market conditions for farmers of cattle and pigs remain tough. It said the prices of beef and pork do not take into account the massive feed price inflation being suffered by farmers.== local initiative == Waitrose is to open 100 convenience stores - following in the footsteps of its bigger competitors such as Tesco with its Express chain and Sainbury's Local. Waitrose is aiming to establish stores in market towns to cash in on the booming demand for locally sourced food. The stores will allocate half in-store space to fresh food, with a high percentage of the latter being supplied by farms in the locality.== PUNCH's profits pinch ==Punch Taverns, which sells food along with drink, announced pre-tax profits 21% down at £109m on sales down 12% at £814m for the half-year to end March 2008. Bad weather last summer, along with floods and the smoking ban, hit profits.Punch sold some of its non-core pubs from its estate of 8,449 pubs, leaving the estate 9% smaller. Punch boss Giles Thorley said Punch now gets better-quality earnings from its managed and leased pubs. Punch is on track to achieve £10m in cost savings this year.