AGM Statement

Associated British Foods PLC
08 December 2006

AGM Statement


8 December 2006



Good morning Ladies and Gentlemen.  I am delighted as your Chairman to welcome
you to the seventy first Annual General Meeting of our company, Associated
British Foods.  It is good to see so many of you here.


It is just past the appointed hour of 11 o'clock so apart from a reminder, as a
courtesy to others, to switch off mobile phones we'll get started.


I am joined on the platform by my colleagues on your Board and by our company
secretary, Paul Lister.  Regular attendees amongst you will no doubt have
spotted two new faces this year and I would like to take a moment to introduce
the new non-executive directors to you.  Brief CV's of both are on page 29 of
the Annual Report.  On my right is Lord Jay of Ewelme.  Michael, could you
please stand so that shareholders can identify you.  On my left is Mr Javier
Ferran.  Javier, please stand also.  Both new directors bring a wealth of
experience developed in their very different career paths.  A common feature,
however, is their very extensive international experience which, with their many
other abilities, will be of great value to ABF with its global range of
operations.  I welcome both Lord Jay and Mr Ferran to the Board.


To our formal business then.  There is a quorum present and I therefore open the
meeting.  You may find it helpful to follow the proceedings by referring to the
Notice of the Meeting which you will find this year on page 120 of the Annual
Report and Accounts.  I apologise for the size of the report this year - the
increase is mainly due to the demands of accounting and other reporting
requirements.


In view of the length of the Notice of the Meeting I will, with your permission,
take it as read.


The formal part of our meeting today consists of twelve resolutions which I will
put to the meeting, after each of which I will invite your questions.  Before we
get to that however I would like to make a few remarks.


The Annual Report and Accounts, which you received some weeks ago, includes full
comment on the past year's trading.  I will only mention a few important issues.
It was an unusual year on the trading front.  Many of our businesses including
AB Mauri, ACH in North America and the hot beverages businesses made good
advances; and so did Primark.  However, two major factors offset this growth.
The impact of sugar regime reform cost £34m and rises in energy costs £64m.
Most of the latter could not be recovered in pricing.


In this context operating profits were only marginally ahead and profits net of
interest and tax fell to some extent.  It is a sign of your Board's confidence
in the group's longer term prospects that one of the resolutions today proposes
an increase in dividend for the year of 4%.


Another difficulty we faced, and the word 'difficulty' is a euphemism, was the
disastrous fire at Primark's UK warehouse just over a year ago.  That this had
relatively little impact on profits is a huge tribute to Primark's management.
Their sales and operating profits grew by 18%.  The fire came just as Primark
prepared for the conversion and roll out of ex Littlewoods stores.  I am glad to
report that this programme has proceeded on time and on budget.  The opening of
our new Dunfermline store on Tuesday this week brought the total of former
Littlewoods stores converted and opened since the acquisition to 36.  We are now
trading from 160 stores in the UK, Ireland and Spain.  We have a further five
former Littlewoods stores preparing to open in the New Year along with other
stores outside this acquisition.  Not least of these is the major London store
due to open in the Spring on Oxford Street.  We estimate that by the end of 2007
we will be trading from 4.5 million sq ft compared with 2.5m only 15 months ago.


More than any year for the last decade, the past year must be viewed as one of
significant change; and one which lays the foundations for strong, sustainable
growth in the years ahead.  It is for this reason that a mere glance at the
numbers is insufficient to grasp the importance of some of the major moves made
to strengthen the group for the future.


To understand fully the significance of this, it is necessary to examine the
nature of the group a few years ago.  In 2000, more than three quarters of our
profits came from UK-based operations with the rest spread broadly evenly
between the Americas, Asia Pacific and the rest of the world.  In the
intervening period we have used our financial resources and strong cash
generation, to reinvest in our core businesses and complete a succession of
value adding acquisitions (Mazola, Capullo, Ovaltine, AB Mauri, Littlewoods and
Illovo).  We have strengthened our positions in international hot beverages and
branded grocery, taken a leading position in global yeast and bakery ingredients
production and backed the growth of Primark.  This has had a profound impact on
the diversity and balance of the ABF group.  When we report next year we expect
to see the proportion of profits from the UK representing less than a half, with
one fifth from the Americas, a little more than this from Europe, Middle East
and Africa and the balance in Asia Pacific.


We are better placed for growth not only from the geographical perspective.  The
developments that have taken place since 2000 have seen the emergence of a broad
spread of businesses of scale.  At that time British Sugar's UK operations were
by far the greatest profit contributor.  Primark's contribution was less than
half of British Sugar's.  None of our other businesses contributed more than
£25m of operating profit. British Sugar faced European sugar regime reform at
some point in the future.


The past year has brought into focus our response to this challenge.  First,
growth prospects have been restored to the sugar business from an uncertain
position.  Next year we will be the world's second largest producer, one third
of that production coming from the most efficient plants in the EU and two
thirds coming from plants located in China and Southern Africa, two regions
experiencing some of the most rapid rates of consumption growth in the world.
They also include some of the lowest cost operations in the world.  Further into
the future we should not discount the potential offered by our partnerships with
BP and DuPont on biofuel development in the UK.


Much of the focus of recent years has been on our sugar and fashion retailing
businesses.  However, we have also developed a number of other substantial
businesses each representing positions of scale in their respective sectors.
Notably these include our global yeast and international hot beverages
businesses as well as the North American grocery operations.  These, and our
other businesses, have also been backed with investment to develop their scale.


At this point I wish to pay tribute to all the people around the world who work
in the ABF group.  Without their skills and determination none of this could
have been achieved.  We are delighted that one of the products of the success of
Primark is the creation of more than 3,500 jobs this year alone.  More is to
come.  Competition locally for posts is always keen yet Primark is mindful of
its community obligations and has, for example, supported initiatives for
training and settlement of the long term unemployed.


At the very end of the year we were joined by 27,000 new colleagues, the
employees of Illovo Sugar in Southern Africa. We look forward with keen
anticipation to working with them as they aim to realize the full potential of
this excellent business.


Let me turn now to current trading.  The markets in which our businesses operate
remain competitive.  Volatility in some commodity prices and fluctuations in
currencies will affect the economic environment.  The group's recent major
investments will be reflected in trading profits, particularly due to the
additional floor space at Primark and the inclusion of Illovo's results.  Net
financial costs will also reflect the heavy investment.


Operating profits in the current year to date have been in line with our
expectations.  We anticipate progress in adjusted earnings per share over the
full year although the profit increase will be more weighted to the second half.


Looking beyond the current year, I am confident that the recent investment and
developments give a strong basis for future progress.  We will continue to back
our businesses with appropriate levels of investment.


For further information please contact:

Associated British Foods plc
John Bason, Finance Director
Tel: [phone]
Geoff Lancaster, Head of External Affairs
Tel: [phone]


Citigate Dewe Rogerson
Jonathan Clare, Chris Barrie, Sara Batchelor
Tel: [phone]




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