LONDON (dpa-AFX) - Associated British Foods plc (ASBFY.PK, ABF.L), in its update on sugar business, on Thursday said that the overall guidance for the business in fiscal 2025 remains unchanged.
Regarding its bioethanol business Vivergo, the company said it intends to close the plant, in the absence of a short-term funding of its losses and a longer-term solution by the UK Government. The company would cease all manufacturing before the end of its financial year on September 13.
The company noted that in April it had stated that the commercial viability at Vivergo was being undermined by the way in which the UK Government was applying regulations to imported ethanol.
Since then, the situation has been made significantly worse by the UK's trade deal with the US, which will allow tariff-free US ethanol into the UK.
ABF said it has engaged in extensive talks with the Government to find a financial and regulatory solution that would enable Vivergo to operate on a profitable and sustainable basis. The extended deadline for the Government to deliver that solution was over on Wednesday.
The company added, 'Recognising the strategic importance of a domestic ethanol supply, the Government has now committed to formal negotiations to reach a sustainable solution. Given the outcome of the negotiations is uncertain, Vivergo is simultaneously beginning consultation with employees to effect an orderly wind-down, with wheat purchases having ceased from 11 June. Unless the Government is able to provide both short-term funding of Vivergo's losses and a longer-term solution, we intend to close the plant once the consultation process has completed and the business has fulfilled its contractual obligations.'
In Azucarera, its Spanish sugar business, the company noted that the operational review has now been completed, and a restructuring process was initiated in May. The beet manufacturing footprint has been reduced to one facility in the north, which will simplify its manufacturing operations, reduce cost and improve efficiency.
In its trading update, the company noted that high rainfall has caused a slow start to processing season in Africa, while the seasonal peak in African profit generation is always over the last two months of the financial year. Production is running at elevated levels to recover some of the initial shortfall.
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