9th Sep 2013 08:20
LONDON (Alliance News) - Associated British Foods PLC Monday said that a strong finish to the year from its retail brand Primark, boosted its full-year operating profit, while sugar sales dropped as a result of lower sugar production.
In a pre-close trading update for its full year results, the British multinational food processing and retail company said that revenues and operating profits for the 52 weeks to September 14 are expected to be ahead of expectations in its retail, agriculture and grocery brands, although challenging conditions in the sugar industry is expected to have a drag on its sugar business.
The company said its operating profit in the second half of the year will be ahead of expectations, and its net interest expense in the second half will be well below last year's change, due to a further reduction in the UK corporation tax rate.
It said its year-end net debt is expected to be around GBP0.9 billion, compare with GBP1.1 billion last year.
AB Foods said that sales at Primark for the full year are expected to be 22% ahead of last year, at actual exchange rates, largely due to an increase in retail selling space, and stronger trading in the second half of the year, as the hotter weather encouraged consumers to head to the shops.
It said that trading in northern continental Europe has been strong throughout the year, with like-for-like growth improving in Spain.
It also said that its operating profit margin in the first half of the year was higher than last year, boosted by lower cotton prices and lower markdowns. The company said its opened 16 new Primark stores during the financial year, including its first store in France, which is due to open in December.
The company said that AB Sugar, one of the world's largest sugar producers, is expected to report full year revenue and adjusted operating profit in line with expectations.
It said that British sugar produced 1.14 million tonnes of sugar during the year, compared with 1.32 million tonnes last year, due to poor growing conditions during 2012, which led to lower beet yields and sugar recovery.
It also said that current negotiations with its EU customers regarding prices for the 2013/14 marketing year are proving challenging with an increasingly negative sentiment.
AB Foods said that its agriculture brands delivered a strong performance during the year and is expected to deliver full year revenues and profit sustainability ahead of last year.
It said revenues in its grocery business continued to improve during the second half of the year, and its full year results will be ahead of last year, with better adjusted operating profit, after facing one-off restructuring costs in George Weston Foods in Australia and Allied Bakeries last year.
Full-year revenue from AB Foods' ingredients brands is expected to be ahead of last year, it said, while its underlying operating profit will be in line with expectations.
It said that the start-up of the new low-cost dry yeast plant in Mexico, and a charge of GBP21 million for the cost of closing its dry-yeast production in Italy, will be included in its full-year results.
The company said it expected to report full-year results on November 5.
AB Foods share were trading 1.9% lower after Monday's opening, trading at 1,816.00 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
AB Foods