ABF vows to continue acquisition spree

Associated British Foods, whose brands include Twinings tea and Kingsmill bread, said it was still in the market for significant acquisitions yesterday despite spending £500m this year on deals such as buying Mazola corn oil from Unilever and Ovaltine from Novartis.

With a cash pile of more than £1bn and strong cash generation, the chief executive Peter Jackson said ABF could afford to spend hundreds of millions of pounds a year on acquisitions and still keep its huge cash mountain.

He said the group would look for more food brands to buy while also expanding the ABF's food ingredients business. "But we will only do deals if they are good value for our shareholders," Mr Jackson said.

He added that there were no plans to sell or demerge its Primark discount-retail business, which increased profits by 20 per cent last year.

The comments came as ABF reported full-year pre-tax profits of £420m, up from £369m last year. The group achieved double-digit operating profit growth in four out of its five business categories. There was particular strong growth at Primark, the grocery business, which includes the food brands, and the ingredients division. Primark has 114 stores and like-for-like sales rose by 4 per cent.

Mr Jackson said each of ABF's divisions was now reaching sufficient scale to absorb acquisitions more easily. He pointed out that the business was also becoming more international. "Three years ago British Sugar accounted for 50 per cent of profits," he said. "Next year analysts estimate it will be about a third."

The shares rose 7.5p to 612.5p and have now more than doubled since early 2000.

Harold Bailey is to retire as chairman at ABF's annual meeting on 5 December after 23 years on the board. He will be succeeded by the existing non-executive director, Martin Adamson, a former senior partner at the accountants KPMG.