Trading for the group since the half year has been strong, resulting in an increase in adjusted operating profit for the second half compared to last year. Although the interest charge will be substantially higher, the company expects some progress in adjusted earnings for the full year.
Expenditure on acquisitions in the year, including debt assumed, will amount to some £370m, primarily comprising the Iberian sugar business Azucarera Ebro and a sugar cane farm in Zambia. Proceeds from the disposal of a number of small businesses amounted to £14m.
Further progress in working capital management in the second half will result in an outflow substantially lower than last year, more than covering the increase in capital expenditure. Advanced consideration of some £120m has been received in respect of the sale of the Polish sugar business, which will complete later this year subject to regulatory clearance.
Net debt for the group at the year end is now expected to be close to the level at the half year. The rights issue announced by Illovo in South Africa will complete early in the group’s new financial year, which will result in a further reduction in the group’s net debt of some £100m.
Source: Associated British Foods
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