? Kingsmill owner says hard winter has also hit sugar
? Primark budget clothing chain has good Christmas
The price of a loaf of bread in the shops is to rise again after Associated British Foods, the owner of Kingsmill, warned that profits would be hit if it did not pass on soaring commodity prices.
The price of wheat has almost doubled since a year ago, and is back to levels last seen during 2008's commodities boom.
ABF refused to say how much higher they wanted to push the price of bread but analysts expect the company could already be in talks with Britain's supermarkets about passing on its increased costs. Recent bread price rises have already wiped out price cuts of about 6p a loaf last summer and are back in line with prices a year ago. The average cost of a loaf of white Kingsmill is now �1.18-�1.20.
Analysts also warned that ABF, which also makes Twinings tea, Ryvita and Ovaltine, faces a �20m drop in profits because some of its UK sugar-beet crop had suffered from the recent thaw.
ABF said in its interim management statement, said: "The very recent sharp rise in temperature following the prolonged period of extremely cold weather before Christmas is having an adverse effect on the quality of sugar beet still to be processed ? 75% of the crop has been processed but the effect on the remainder is still to be determined."
Shares fell more than 3%, despite the group reporting a healthy 10% rise in first-quarter sales.
ABF's British Sugar division typically produces more than 1m tonnes of sugar a year, with more than half coming from Africa and a large proportion from Britain. Analysts said that overall ABF was benefiting from higher sugar prices, driven in particular by strong demand in China, but the stockbrokers Panmure Gordon said that the recent thaw in Britain could cost it �20m.
ABF also owns the budget clothing chain Primark, which enjoyed another strong Christmas, despite the impact of the bad weather. ABF said that Primark traded "very well", with total revenue up by 12% in the 16 weeks to 8 January 2011. This is thought to include a 4% rise in like-for-like sales.
While rivals such as New Look have reported profit warnings because of the snow, ABF expects that Primark will still hit its targets for this financial year. However, it warned that the increase in VAT, and higher cotton prices would put Primark's profits under pressure in the months ahead.
Primark would not guarantee that it would not raise the price of its clothes on the back of surging cotton prices but said its policy remained offering the "best value on the high street".
ABF's finance director, John Bason, said the company had not already made across-the-board price rises but told analysts that he could not promise that there had not been any increases at all. Primark has 214 stores, having recently opened 10 new outlets. Grocery sales also rose by 9%, led by ABF's beverages.
Source: http://www.guardian.co.uk/business/2011/jan/20/abf-weather-commodities-price-rises
Asia Simon Barker Arsenal Blackburn Rovers West Ham United Fifa
No comments:
Post a Comment