Harry Bailey, deputy chairman, said: "We have spent pounds 140m on acquisitions this year so far, but for deals of a substantial size we do not see any value, whether in the UK, in continental Europe, or in the US."
The company said that with interest rates falling there was a good case for returning part of the cash to shareholders. Though the company did not suggest there would be further payouts, analysts said there might be more to come if acquisitions stayed expensive.
The company has been on the lookout for food ingredient deals, particularly in the US, but prices are still seen as too high. However, the company did pull off the $215m purchase of SPI Polyols in October.
The payout accompanied a dip in first-half profits from pounds 193m to pounds 109m after exceptional charges of pounds 74m. Stripping these out, operating profits on continuing operations fell by just pounds 4m to pounds 144m, which the company said was a creditable performance given the difficult trading conditions.
ABF has been badly affected by the strength of the pound, which has a particular impact on British Sugar, which sells a fifth of its sugar output on the world market. However, British Sugar profits edged up in spite of falling prices.
But more resources are expected to be put behind Primark, the high street discount retailer, where profits increased by an incredible 75 per cent on sales up 21 per cent. The picture is more mixed at Allied Bakeries, where the supermarket "bread wars" distorted the market towards cheaper loaves.
Though ABF's shares have underperformed the market by 40 per cent in the last two years, analysts feel there are grounds for optimism. Peter Jackson, currently the head of British Sugar, moves up to the chief executive position in June. The hope is that he will take a long look at some of ABF's low-returning assets, such as baking and milling, and some of its ice-cream interests.
Investec Henderson Crosthwaite is expecting full-year profits of around pounds 400m. On yesterday's closing price of 441p, up 14.75p, the shares trade on a forward multiple of 14. Much depends on the strength of sterling, but at these levels the shares look good value, analysts say.Reuse content