AB Foods raises annual earnings guidance

July 10, 2014

LONDON (Reuters) – Associated British Foods raised its annual earnings guidance after a strong third-quarter performance from its Primark discount fashion chain more than offset continued weakness in its sugar operations.

The firm said on Thursday it now expected adjusted earnings per share for the 2013-14 year to be ahead of the 98.9 pence made in 2012-13. Previously it had forecast a similar outcome.

AB Foods said the raised guidance reflected better profit progress at Primark as well as at its grocery and ingredients businesses outweighing the adverse effects of lower sugar prices and the strengthening of sterling.

It said the likely negative impact on full-year adjusted EPS arising from currency translation, if current exchange rates prevail, would be about 50 million pounds.

Group revenue from continuing operations for the 40 weeks to June 21 was 2 percent below the same period last year but 2 percent ahead at constant currency.

Shares in AB Foods, 55 percent owned by the Weston family, and up 65 percent over the last year, closed Wednesday at 3,000 pence, valuing the business at 23.7 billion pounds.

The group said Primark’s sales increased 22 percent at constant currency in the 16 weeks to June 21, its fiscal third quarter, helped by warm weather and new store openings.

On the same basis ingredients sales were up 9 percent and grocery sales down 5 percent.

Sugar sales were down 20 percent, driven by substantially lower sugar prices, weaker EU sales volumes and lower sugar production in north China.

AB Foods has previously guided that lower sugar prices, as the market adjusts ahead of EU regime reform in 2017, will mean a substantial reduction in profit from sugar in 2013-14 year.

(Reporting by James Davey; editing by Jason Neely)

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