10th Sep 2018 08:19
LONDON (Alliance News) - Associated British Foods PLC said Monday that its outlook for the nearly-ended financial year remains unchanged, with progress expected in adjusted operating profit and adjusted earnings per share, despite lower sugar prices in the EU.
For the year ending September 15, the Primark clothing chain owner said it generated a "strong performance" from its Retail, Grocery, Agriculture and Ingredients businesses which offset the negative effects of lower sugar prices.
The company explained that its Sugar division revenue and adjusted profit will be "well down" on last year, mainly due to the lower prices issues.
"The global supply of sugar has moved into surplus and the world market sugar price has reduced," AB Foods said.
It added: "The EU sugar regime ended in October 2017, removing sales quotas and constraints on exports. As a result of substantially higher EU sugar production in 2017/18, through increased crop area and beet yields, EU prices have fallen faster and more significantly than expected and are now more closely related to these lower world market prices."
Furthermore, AB Foods said it expects to incur a GBP20 million loss to due foreign exchange movements, with two thirds of the group's operating profit earned outside the UK.
The company's shares were trading 2.6% lower at 2,213.00 pence each, the worst performer of the FTSE 100 index.
Looking at its retail division, the company said it expects Primark sales up 5.5% on the previous year at constant currency, on the back of increased selling space offset by a 2% decline in like-for-like sales. At actual exchange rates sales are expected to be 6% higher than last year.
"Primark has performed well in the UK, where full year sales are expected to be 6% ahead of last year, and our share of the clothing market has increased significantly," AB Foods said.
It added: "Like-for-like growth for the full year is expected to be 1.5% driven by a strong first half and a second half performance in line with an exceptionally strong second-half last year."
The company said that on a like-for-like basis, Primark sales in Northern Europe were "held back" by the negative weather which "led to difficult retail conditions" but were still "well ahead of last year driven by increased selling space".
In Grocery, Agriculture and Ingredients businesses, annual revenue is expected to be "ahead of last year", AB Foods added.
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