By Ed Ballard
LONDON--Associated British Foods PLC (PFD.LN) said on Thursday
it will take a 128 million ($194.9 million) charge its first-half
results from shutting down some of its sugar operations in China as
low sugar prices squeezed earnings last year.
The company, whose activities include the Primark no-frills
clothing chain, said producing enough sugar beet in Heilongjiang in
the north-east of China to supply factories elsewhere in the
country has proved "most challenging.
"When combined with continuing poor market prices we have now
concluded that these factories will remain uneconomic for the
foreseeable future and have therefore announced our intention to
cease sugar operations in Heilongjiang," the company said.
Writing down the business as well as incurring associated cash
costs explained the first-half charge though closing the
Heilongjiang operations will protect the cash flow of its other
sugar factories in China, AB Foods said.
AB Foods, which also owns the Silver Spoon sugar brand, reported
a 3% currency-adjusted increase in revenue for the 16 weeks to Jan.
3, a 1% gain at actual exchange rates, compared with the same
period the previous year as the strong dollar weighed on sales.
Sales at Primark rose 15% over the Christmas period, the company
said.
AB Foods said it will post a decline in adjusted operating
profit for the full-year, blaming adverse currency movements as
well as lower sugar prices for the fall, though lower interest
payments and a smaller tax bill have mitigated the impact on
earnings, the company said.
Write to Ed Ballard at ed.ballard@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires