Primark owner Associated British Foods PLC (LSE:ABF) has begun consultations about winding down its bioethanol businesses and has restructured its Spanish sugar arm, after issuing warnings about profits from the subsidiaries two months ago.
The FTSE 100-listed group said its guidance for sugar remains unchanged from the April update, despite a slow start to its African sugar season.
With bioethanol arm Vivergo under significant pressure due to UK government regulations that it said were "made significantly worse" by the US trade deal that included tariff-free US ethanol imports, discussions had been taking place with Whitehall for a financial and regulatory solution.
Yesterday, the extended deadline for an agreement passed without resolution but even though the government has now committed to formal negotiations to find a sustainable outcome, given the uncertaint outcome Vivergo has begun consultation with employees on an orderly wind-down.
Wheat purchases stopped from 11 June and the FTSE 100 group intends to close the plant before the end of its financial year on 13 September 2025 unless short-term funding and a long-term solution are secured.
Meanwhile, ABF’s Spanish sugar business, Azucarera, has completed an operational review and started restructuring in May. It will reduce its sugar beet manufacturing to one facility in the north of the country, aiming to cut costs and improve efficiency.
Africas sugar operations have seen a slow start to the processing season caused by high rainfall, but production is now "elevated" to recover lost volumes.
The update did not mention Allied Bakeries, which ABF confirmed last month has been the subject of talks with potential private equity buyers.
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, https://www.proactiveinvestors.co.uk/companies/news/1070705/ab-foods-in-talks-about-selling-kingsmill-bread-division-allied-bakeries-1070705.html