5th Jul 2018 07:50
LONDON (Alliance News) - Associated British Foods PLC on Thursday backed its full-year outlook though within this now sees lower profit from its Sugar division but an improved outturn from clothing retailer Primark.
Revenue from continuing businesses for the 40 weeks to June 23 was 3% higher on last year at constant currency, and 2% ahead at actual exchange rates. Excluding Sugar, sales growth was 6% ahead at constant currency and 5% ahead at actual rates.
For the full-year, AB Foods said it expects good profit growth in Grocery, Agriculture and Ingredients. However, the company now expects reduced profit from AB Sugar due to lower EU sugar prices, but increased profit from Primark driven by higher margins.
Consequently, AB Foods said its outlook is unchanged with progress expected in adjusted operating profit and adjusted earnings per share.
For the third quarter, AB Sugar revenue was down 17%, as expected. This was "entirely the result of significantly lower EU prices which adversely affected our UK and Spanish businesses", the company said.
AB Foods continued: "EU sugar prices are continuing to decline driven by low world sugar prices and excess supply following very high sugar production in the EU last year. For our next financial year, this level of EU sugar prices would represent a substantial reduction compared to those achieved this year. As a result, our expectations for sales and profit at AB Sugar, both for this financial year and next, are lower than previously expected."
Sales at low-cost fashion chain Primark in the year to date were 6% ahead of last year at constant currencies and 7% ahead at actual rates, driven by increased retail selling space.
Like-for-like sales in the third quarter improved on those recorded for the first half of the year, driven by better trading across the eurozone.
The company said it expects Primark's margin in the second half to be "well ahead" of both the 9.8% achieved in the first half of its current financial year and the 10% posted for the first half of last year.
"Stock has been tightly managed and markdowns, although higher than the very low level achieved last year, will be better than previously expected and as a result, the profit from Primark will now be higher than expected," said AB Foods.
Among other divisions, Ingredients revenue in the third quarter was 4% ahead of last year, with Grocery revenue also 4% ahead and Agriculture up 12%.
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