Primark boost at Associated British Foods

Primark owner and sugar group Associated British Foods said interim results will be ahead of company expectations after a strong performance from Primark outweighed weakness in sugar.

The owner of AB Sugar said adjusted operating profit will be higher than last year however profit from sugar in the first half will be lower than last year after unusually low sales volumes in China last year.

The group said net financing costs in the first half will benefit from a strong cash flow and lower net debt during the period while earnings per share for the period will be substantially ahead of last year.

"Our expectation for the full year is unchanged and earnings growth for the full year will therefore be heavily weighted towards the first half," it said in a statement.

Primark

Sales at Primark during the first half are expected to be 23% ahead of the same period last year and 25% ahead at constant currency. This followed very strong like-for-like sales growth, an increase in retail selling space and robust sales in the larger new stores, it said.

The group reported lfl growth of 7% as it benefited from weak comparisons during the unseasonably warm autumn of 2011 and good trading over the Christmas period.

Sugar

The group said profit from sugar in the first half would be lower than last year with an improvement at Illovo more than offset by a decline in China and a non-cash charge for the mothballing of its two smallest beet sugar factories in north China.

Sales volumes in China were unusually low last year and, as a result, this year's revenues will be ahead despite deteriorating prices.

UK revenues were ahead of last year with higher sales volumes compared with last year's abnormally low level at the beginning of the financial year, and marginally higher sugar prices, the group explained.

In Spain, delayed planting in the south is expected to reduce the size of the southern crop and heavy rains will extend the campaign in the north into March.

Grocery

Revenue in the first half is expected to be little changed from last year and profit will be substantially boosted by the non-recurrence of restructuring costs in George Weston Foods in Australia and Allied Bakeries.

Twinings Ovaltine again performed well with some good market share gains, it said.

Ingredients

Revenue in the first half is expected to be in line with last year although 6% higher at constant currency. It said changes in exchange rates had no material effect on profit from trading, which was in line with last year.

CJ