Apr 23, 2014
Primark growth offsets weak sugar market at AB Foods
Apr 23, 2014
LONDON, United Kingdom - Associated British Foods (ABF.L) met forecasts with a 1 percent rise in first-half profit with a strong performance from its Primark clothing chain and progress in its grocery operation offsetting a major fall in its sugar business.
The firm said on Wednesday that lower sugar prices will result, as previously indicated, in a substantial reduction in profit from sugar for its full 2013-14 year, while the current strength of sterling, if maintained, will have a greater impact on translation of overseas results in the second half. However, it said it expected full year retail profit to be "well ahead" as Primark continues its successful expansion. "When combined with improvements in grocery and ingredients and a lower interest charge, we continue to expect adjusted earnings per share for the financial year to be similar to (the 98.9 pence made in) 2013," it said.
The group also said on Wednesday it planned to take Primark, which currently trades in nine European countries, to the United States with store openings slated for the north-east of the country. AB Foods made an underlying operating profit of 497 million pounds ($836.12 million) in the six months to March 1. That compares to analysts' forecasts in a range of 495-503 million pounds.
Operating profit in sugar slumped to 64 million pounds from 162 million pounds last time, reflecting lower sugar prices, as the market adjusts ahead of EU regime reform in 2017. Earlier this month Germany's Sudzucker, Europe's largest sugar processor, issued a huge profit warning.
At Primark operating profit jumped 26 percent to 298 million, on the back of a 14 percent rise in sales.
Group underlying earnings per share rose 10 percent to 45.8 pence in the first half versus analyst forecasts of 44-45.2 pence. Revenue fell 2 percent to 6.21 billion pounds.
The firm is paying an interim dividend of 9.7 pence, up 4 percent.
Shares in AB Foods, 55 percent owned by the family of Chief Executive George Weston and up 47 percent over the last year, closed Tuesday at 2,722 pence, valuing the business at 21.5 billion pounds.
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