ABF Profits From Primark
LONDON -- Associated British Foods (ISE: ABF.L) announced an expected 17% increase (15% at actual exchange rates) in like-for-like sales at Primark against 2011 in its pre-close period trading update, while like-for-like sales growth is expected to be 3% for the full year.
Management credits this to an increase in trading space, with new stores and international expansion -- including Germany and Spain -- exceeding expectations, while a second store on Oxford Street in London is likely to further boost the company's coffers.
ABF, however, has many strands to its business outside of Primark, and its sugar operations have seen a boost from its European and African revenue increases, the former in part due to "the absence of the weather-related challenges of the previous year" (1.3 million tonnes of sugar was produced compared with just under 1.0 million tonnes last year), but both areas also a result of highly successful campaigns. Profit in China, however, is expected to be considerably lower "as a result of weaker domestic selling prices."
Elsewhere in the FTSE 100 company's operations, the strong performance in agriculture has continued, with revenues "ahead and profit expected to be in line with last year," while grocery "revenues for the full year will be ahead of last year."
The full pre-close trading update explains each area of the business in depth, but overall ABF's adjusted operating profit for the second half will be in line with expectations and substantially ahead of last year. Capital expenditure for the group will be lower than last year as a number of long-term projects -- such as the new Oxford St Primark -- have been completed. The company also confirmed its July acquisition of Elephant Atta, the U.K.'s leading ethnic flour brand, for 34 million pounds, with regulatory approval granted on Sept. 6.
Shares were down marginally when the market opened and have since dropped by a total of 1.5%, or 20 pence, to 1,286 pence at the time of writing.
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