ABF acting on enzymes and yeast potential

By Jess Halliday

- Last updated on GMT

Related tags: Monosodium glutamate, Enzyme, Milk, Abf ingredients

ABF acting on enzymes and yeast potential
ABF Ingredients is taking advantage of high demand in enzymes and yeast, with new capacity coming on board this year or next. But for the last year, growth was driven largely by currency benefits.

The division of Associated British Foods (ABF) has today reported a 20 per cent growth in revenue for the full year ended 12 September, to €989m. Operating profit was up 13 per cent to €88m.

AB Mauri, the yeast and bakery ingredients business, saw good growth in all regions, the company said. But ABF Ingredients, which includes AB Enzymes, Abitec, Ohly and PGP International, saw lower volumes sales and margin pressure as commodity prices fell.

The results from ingredients have fallen short of analysts expectations. Andrew Wood, senior research analyst at Bernstein, said H2 growth was expected to be 18 per cent, but it only achieved 12 per cent. Operating profit was up 8 per cent, against a 10 per cent expectation.

However the company is working to expand capacity for high potential parts of the business. It has completed a 30 per cent expansion to its enzyme plant in Finland this year, which “removes the previous capacity constraint by allowing previously outsourced production to be brought in-house and provides much needed flexibility for further development of this fast-growing business”,​ the company said.

Feed enzymes were said to have performed particularly well. Meanwhile, the Freedonia Group predicts market value for food and beverage enzymes will grow six percent annually to $1.5bn in 2013.

The company is also building a new yeast extract facility adjacent to its yeast plant in Harbin, China. This will ease up supply limitations since its yeast extract plant in Germany is now at full capacity – and will be a “low cost”​ alternative, the company said.

The construction of the yeast plant in Harbin was announced in late 2007 and will produce more than 15,000 tonnes of yeast extracts for food and fermentation. Earlier this year Ohly announced a new food application centre and sales office in Shanghai, which brings it closer to its Asian customers and helps it meet local customer demands and tastes.

Demand for yeast is being driven by interest in ingredients that do no not have to be labelled with E-numbers, as opposed to taste enhancers like monosodium glutamate and hydrolysed vegetable protein. Other firms to expand recently to meet new demand include Leiber and DSM.

US profitability

The division also saw a turn-up in its US operation in the last year, as the cost of key raw materials fell from the dizzy heights of 2008. These include fatty acids, rice and palm oil. Changes in the company’s global sourcing were also said to pique profitability.

Several shifts in whey protein have taken place in the US: The whey protein business has been merged with the specialty extruded ingredients business in Woodland, California, in a bid to reduce the cost base and maximise efficiencies.

Whey protein has become a priority in Juda, Wisconsin; and the loss-making milk protein facility in Norfolk, Nebraska, has been closed.

Related topics: Ingredients

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