21st Apr 2015 06:34
LONDON (Alliance News) - Associated British Foods PLC Tuesday reported a drop in profit in the first half of its financial year as the food business, particularly AB Sugar, made lower sales due to food price deflation and the strength of sterling.
The group reported a 51% drop in pretax profit in the 24 weeks to February 28 to GBP213 million from GBP434 million the year before, but a revenue increase of 1% to GBP6.2 billion.
AB Foods said that while it made "significant progress" in operating profit for Primark, Agriculture and Ingredients and further improvement in the Grocery division's margin, profitability at AB Sugar was substantially lower as a result of much weaker EU sugar prices.
It noted that discount retailer Primark's performance was driven by significant expansion of selling space and "superior trading" by the stores opened in the past 12 months, adding that plans for its entry into the north east of the US are well advanced.
Revenue in the food businesses was lower than last year primarily because of food commodity price deflation, particularly in sugar, and sterling was stronger against most of its operating currencies, excluding the US dollar, AB Foods said.
"If the current euro weakness against sterling and the US dollar persists, this will have an impact on the group's operating profit for the remainder of this financial year and a greater impact next year," Chairman Charles Sinclair said in a statement, adding that the company also expects a much lower underlying tax rate for the full year compared with last year's rate, and a "modest decline" in adjusted earnings per share for the full year.
The group said it will pay an interim dividend of 10 pence per share, up 3% from the year before.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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