Associated British Foods PLC
24 August 2007
Associated British Foods plc
Investment in China's beet sugar industry
For immediate release
Associated British Foods plc ('ABF'), the international food, ingredients and
retail group, has today announced that it has reached agreement with the Hebei
Tian Lu Sugar Group ('Tian Lu'), based in the north east of China, to form a
joint venture. The formation of the joint venture, to be called Bo Tian, is
subject to government approval with clearance anticipated by the end of
September.
Tian Lu will contribute its existing beet sugar business to the joint venture
and ABF will contribute some £70m to fund our plans for future development and
expansion. ABF will hold 51% and Tian Lu will hold the remaining 49% of the
joint venture.
The Chinese beet sugar industry is centred in the north east where the provinces
have abundant high quality arable land with ideal weather conditions to produce
high sugar content in the beet. Tian Lu operates four beet sugar factories:
Wangkui and Yi'an in Heilongjiang province, Zhangbei in Hebei province and
Qianqi in Inner Mongolia. Sugar production was 145,000 tonnes last year with
sales of £34m.
A significant increase in sugar production is planned. There is a major
opportunity to improve beet yields by the application of British Sugar's
European beet sugar expertise through better agricultural practices and
technology transfer. In addition, refinery capacity will be increased through
investment and efficiency improvements.
The much larger cane sugar industry is centred in southern China. British Sugar
has four cane sugar refineries in Guangxi province. Following years of
investment in refinery capacity and efficiency and agricultural development,
sugar production will exceed 500,000 tonnes this financial year.
George Weston, Chief Executive of Associated British Foods, said
'This acquisition represents another exciting development for us in China. Our
experience in operating cane sugar factories in southern China, combined with
our skills as the lowest cost beet sugar producer in Europe will enable us to
introduce improvements quickly and efficiently to China's beet sugar industry.'
For further information please contact:
Associated British Foods
John Bason, Finance Director
Tel: 020 7399 6500
Citigate Dewe Rogerson:
Jonathan Clare/Chris Barrie
Tel: 020 7638 9571
Notes to Editors
1. Associated British Foods is a diversified international food,
ingredients and retail group with global sales of £6 billion and 75,000
employees. It is listed on the London Stock Exchange with a market
capitalisation of £6.7 billion. It operates in 46 countries with significant
businesses outside Europe in Southern Africa, the US, China and Australia. Its
aim is to achieve strong, sustainable leadership positions in markets that offer
potential for profitable growth. It strives to achieve this through a
combination of organic growth, the acquisition of complementary businesses and
achievement of high levels of operating efficiency. The group has established a
track record of successful value adding acquisitions including a 51% stake in
Illovo Sugar, Africa's biggest cane sugar producer with extensive agricultural
and manufacturing operations in six African countries, AB Mauri (its leading
international yeast and bakery ingredients business), Littlewoods stores for
Primark and the grocery brands Mazola and Ovaltine.
2. British Sugar is a substantial business within ABF. It has
operations in the UK, Poland, China and Southern Africa which process some 4
million tonnes of sugar annually. It is the most efficient sugar producer in
Europe and has a proven ability to create value through improvement in
agricultural yields, operational efficiencies, co-product development, marketing
and product innovation. A number of its operations are already successful joint
ventures. It has world class production facilities and technical expertise. The
largest and most efficient beet sugar factory in the world is at Wissington in
Norfolk and this is also the site for the UK's first bioethanol plant. ABF has
also announced the formation of a joint venture with BP and DuPont to build a
world-scale cereal-based bioethanol plant in the UK.
British Sugar is the sole processor of the UK sugar beet crop and over 1
million tonnes of sugar is processed each year at its factories. It supplies
food and drink manufacturers in the UK and Europe and Silver Spoon for the
retail market. Two beet sugar factories operate in Poland including Glinojeck,
which is the country's largest, with an annual capacity of over 100,000 tonnes.
British Sugar made its first investment in China's sugar industry in
1995 with a joint venture in a cane sugar refinery in Guangxi province in
southern China. It now has four cane sugar refineries in Guangxi and, following
development and expansion of these, sugar production will exceed 500,000 tonnes
in this financial year.
This information is provided by RNS
The company news service from the London Stock Exchange
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