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Investing.com -- Associated British Foods (OTC:ASBFY) said on Thursday that its bioethanol unit, Vivergo, remains under threat due to regulatory pressure and a recent U.K.-U.S. trade deal that will allow tariff-free imports of American ethanol.
ABF warned that unless the U.K. Government provides both short-term funding and a longer-term solution, the business will shut down. While formal negotiations with the Government have now begun, the company has started employee consultations and ceased wheat purchases as of 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," ABF said in the update.
"We would cease all manufacturing before the end of our financial year on 13 September 2025," it added
In Spain, the company completed a strategic review of its Azucarera business, resulting in a decision to reduce its beet processing operations to a single site in the north. The move is intended to simplify production, lower costs and improve efficiency.
Despite heavy rainfall delaying the sugar season in Africa, ABF said production is currently running at high levels to offset the shortfall.
It reiterated that overall guidance for the Sugar segment in the current financial year remains unchanged.
ABF shares rose more than 1% in London trading.