ABF's cash balances bring in pounds 83m profit

ASSOCIATED British Foods, the bread and sugar company, earned up to 12 per cent on its cash mountain last year, helping the group to boost full-year profits from pounds 267m to pounds 338m before tax.

The group earned pounds 83m, up from pounds 67m, from average balances of between pounds 700m and pounds 800m, although that was offset by borrowings that left it with a net pounds 500m at the 18 September year-end.

ABF gained from sterling leaving the exchange rate mechanism, while falling interest rates allowed it to make profits by switching investments.

The results also benefited from a pounds 12m increase in the value of its 18 per cent stake in Berisford International to 90p a share. Yesterday's closing price was 108p.

Operating profits from group businesses - which include Sunblest bread, Twinings tea, Ryvita and British Sugar - rose pounds 4m to pounds 273m, but that was due to pounds 9m of exchange rate benefits and a pounds 15m gain on the devaluation of the green pound.

'Extremely competitive conditions in the market place for bread, which increased during the period, further depressed margins in our bakery division,' Garry Weston, ABF's chairman, said.

The manufacturing division made pounds 239m operating profit, up from pounds 224m, with British Sugar increasing its contribution by 17 per cent to pounds 162m.

Earnings per share were 50.7p (37p) and the second interim dividend is 6.5p (5.5p), making 15p (14p) for the year.

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