10th Jul 2014 06:54
LONDON (Alliance News) - Associated British Foods PLC Thursday said the persistent strength of sterling continued to hit sales in the third quarter, while the growth of its retail business Primark failed to offset a huge sales decline in its struggling sugar business.
The food, ingredients and retail group posted a 3% decline in total sales at actual currency exchange rates in the third quarter, hit by the strength of the sterling, but rose 3% on a constant exchange rate basis.
In the year to date, AB Foods said sales were down 2% at actual rates, and were up 2% at constant rates.
"The likely negative impact arising from currency translation, if current exchange rates prevail, will be some GBP50 million compared with last year's result," the company said in a statement Thursday.
Despite the significant hit from sterling strength, the company said it now expects full year adjusted earnings per share to be ahead of last year, as a bigger profit from its retail division and its grocery and ingredients businesses offset the currency hit and lower sugar prices.
The group's low-cost fashion chain Primark is by far its biggest profit driver, and now makes up far more of the group's overall operating profit than its sugar business and grocery and ingredients business.
Primark sales in the third quarter were up 19% in the third quarter, and are up 16% in the year to date, boosted by new store openings, AB Foods said. However the company's sugar business saw sales decline 26% at actual rates in the quarter, and have fallen 23% in the year to date.
The group's sugar business, particularly in China, has been hit hard by the sharp decline in world sugar prices this year, ahead of EU regulatory change, with the end of EU sugar quotas set for 2017.
Grocery sales were down 12% at actual exchange rates in the quarter, agriculture sales down 11%, and ingredients sales down 5%. Sales across all those businesses were also down in the year to date.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
AB Foods