ABF plans to sell sugar business in China for $1bn

UK-based Associated British Foods (ABF) is reportedly considering to sell its China-based sugar business for $1bn, as it intends to focus on operations in Africa and Europe.

ABF has started inviting bids for its five cane sugar mills and two sugar beet facilities operating under AB Sugar unit in China, reported Financial Times.

AB Sugar was established in 1995 through a joint venture.

The Wall Street Journal reported citing people familiar with the situation that the bids are due by the end of the month, and the sale is likely to attract more number of domestic buyers.

Sugar consumption in China is witnessing a decline due to weak economic growth, and a rise in production costs due to wage increases.

ABF is a leading player in the sugar segment in China in terms of capacity. Last year, it decreased production in China and divested two factories in Heilongjiang province. As a result of the divestment, the company took a non-cash charge of £100m.

The company’s facilities currently have an annual sugar production capacity of more than 800,000t.

Of the three geographic sugar regions, the company’s Chinese operations contribute 23% to the unit’s sales, reported Financial Times.

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Image: ABF is planning to sell its China-based sugar business. Photo: courtesy of Mister GC via FreeDigitalPhotos.net.