Sugar leads the way at AB Foods

Revenue growth at Primark-owner Associated British Foods has been in line with the rate reported in the interim results, with the Sugar division the outstanding performer.

Group revenue in the 40 weeks to June 23rd was up 11% on the corresponding period a year earlier, or 12% higher on a constant currency basis. In the final 16 weeks of that period year-on-year (y/y) growth quickened to 13%.

The food group's Sugar division has really kicked on of late, with revenue up 54% y/y in the 16 weeks to June 23rd, taking the y/y growth rate over the 40-week period to 28%.

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In contrast, Agriculture's growth has slowed to 10% over the 16-week period versus 15% over the 40-week period, and Grocery revenue has been flat y/y over the 16-weeks, slowing 40-week y/y growth to 3%.

The Ingredients division has gone ex-growth over the 16-week period, with revenue down 2%, though over the longer period the division's top line is still 1% higher.

The Retail division, which mainly consists of clothing group Primark, saw sales rise 13% y/y in the 16 weeks to June 23rd; in the 40 weeks to June 23rd, sales were up 11%, or 16% on a constant currency basis. Trading in the UK and Ireland during the quarter was good with the exception of April when cold and wet weather led to weak sales. Trading in continental Europe remained healthy throughout the period. As anticipated, operating margins are improving in the second half reflecting lower input costs.

Capital expenditure for Primark was in line with last year and, as projects within the food businesses complete, the overall level of capital expenditure was lower. Net debt at June 23rd was below £1.4bn, lower than the third quarter last year, having reduced by more than £200m since the half year. Further reduction is expected by the year end.

"The group remains on track to deliver substantial growth in both adjusted operating profit and adjusted earnings per share for the full year," the statement said.

JH