4th Jul 2019 08:47
(Alliance News) - Associated British Foods PLC on Thursday reported an increase in revenue in its financial year-to-date, helped by strong performances in its Retail and Ingredients units.
The food and retailing company said revenue at constant currency for the 40 weeks to June 22 was 3% higher than the same period last year. At actual exchange rates, revenue grew by 2% year-on-year.
For the full year, the FTSE 100-listed company said it expects to report good profit growth in discount fashion retailer Primark and, on an underlying basis, in its Grocery division.
Overall, the full year outlook for the group is unchanged, with adjusted earnings per share expected to be in line with last year's 134.9 pence.
On a divisional basis, revenue in Grocery for the third quarter was 1% ahead of last year. AB Foods said it continued to take action to reduce the cost base at Allied Bakeries and has undertaken a detailed review of its network to optimise production capacity and locations, and routes to market.
Revenue in AB Sugar was in line with last year's third quarter, the company said, driven by higher sales at Illovo. This represented an improvement on the decline in sales in the first half, AB Foods noted.
AB Foods noted that EU stock levels have been tightening during 2018 and 2019, and are expected to remain at this lower level in 2020 following a reduction in the crop area. As a result, the company said it expects to see an increase in spot EU sugar prices.
Meanwhile, in China, some improvement over last year is expected, AB Foods said.
In South Africa, Illovo's season has now started following a delay caused by high rainfall, the company said.
Turning to the Ingredients division, revenue in the third quarter was 5% ahead of last year driven by both AB Mauri and ABF Ingredients.
In the Agriculture unit, revenue growth continued in the third quarter, driven by higher feed sales, AB Foods said.
In the Retail division, sales at Primark in the year-to-date were 4% ahead of last year, driven by increased selling space.
Retail selling space increased by a net 800,000 square feet since the beginning of the financial year. As at June 22, 372 stores were trading from 15.6 million square feet of retail selling space which compared to 14.7 million square feet a year ago.
In the remainder of the year AB Foods said it will open a store in Bonn, Germany, bringing Primark's total global selling space to 950,000 square feet.
In the UK, like-for-like sales were held back by "unseasonable weather" in May, the company explained, while in the US it saw "encouraging" like-for-like sales growth.
AB Foods didn't say what it meant by "unseasonable" but May this year in the UK was cooler than May 2018, likely putting off purchases of summer clothing.
Primark sales in the eurozone also were affected by the unseasonable weather in May but trading recovered strongly in June, AB Foods said.
The stock was trading 0.4% higher on Thursday in London at 2,453.00p a share.
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