TIDMABF
RNS Number : 3090N
Associated British Foods PLC
17 January 2019
17 January 2019
Associated British Foods plc
Trading update
Associated British Foods plc today issues a trading update for
the 16 weeks to 5 January 2019 summarising the significant trading
developments since the last market update.
Trading outlook
Our outlook for the group is unchanged, with adjusted operating
profit and adjusted earnings per share for the year expected to be
in line with last year.
Group revenue
Group revenue from continuing operations for the 16 weeks ended
5 January 2019 was 2% ahead of the same period last year at
constant currency. Sterling has strengthened marginally against
most of our major trading currencies, other than the US dollar, and
as a result sales from continuing operations at actual exchange
rates were 1% ahead.
Other than the expected reduction in Sugar revenue, sales growth
was delivered by all our businesses.
Retail
Sales at Primark were 4% ahead of last year, at both constant
currency and actual exchange rates, and with a higher operating
profit margin, profit was well ahead. Sales growth was driven by
increased retail selling space partially offset by a modest decline
in like-for-like sales.
The UK performed well and our share of the total clothing market
increased significantly. Sales were 1% ahead of last year for the
period, in a market which declined year-on-year. Like-for-like
sales in September and October were ahead but reduced footfall
affected sales in November. Sales over the Christmas trading period
exceeded our expectations.
Sales in the Eurozone were 5% ahead of last year at constant
currency. Sales growth was especially strong again in France,
Belgium and Italy, performance strengthened in our second largest
market, Spain, but soft trading continued in a difficult German
market.
We are pleased with the strong US performance in the period.
Sales were well ahead and benefitted from very strong trading at
the Brooklyn store, which opened in July last year.
As expected, operating profit margin in the period increased,
with purchases having been contracted at a weaker US dollar
exchange rate than last year, and through better buying and tight
stock management. Operating profit for the full year is in line
with our expectations.
Retail selling space increased by 0.3 million sq ft since the
financial year end and, at 5 January 2019, 364 stores were trading
from 15.1 million sq ft which compared to 14.2 million sq ft a year
ago. Four new stores were opened in the period: Seville and Almeria
in Spain, Toulouse in France and a city centre store in Berlin,
Germany. In addition, in the UK, we relocated to larger premises in
Harrow and the Merry Hill store was extended.
We now expect to open 0.9 million sq ft in this financial year.
The opening of the American Dream shopping mall in New Jersey has
been delayed and consequently our new store there will now open
next financial year while our smaller store in Oviedo, Spain will
close this spring. Our 160,000 sq ft store in Birmingham is
expected to open in April and our first store in Slovenia later
this financial year.
Sugar
AB Sugar revenue from continuing operations was 12% behind last
year at constant currency and 14% behind at actual exchange
rates.
As expected, the lower revenue in our UK and Spanish businesses
in the period was the result of the lower EU sugar prices for
contracts negotiated at the end of last financial year. Looking
ahead, the development of our sales book for this year has
indicated early signs of recovery in EU sugar prices.
The UK campaign is progressing well and production will now be
1.15 million tonnes as a result of higher sugar content in the
beet. Beet yields this year are lower than the record level last
year and so production is lower than the 1.37 million tonnes
achieved last year.
The northern Spanish campaign at Azucarera has commenced. Total
beet sugar production is expected to be some 300,000 tonnes, and a
further 170,000 tonnes will be produced from the refining of cane
raws at Guadalete. In December we announced a reduction in the beet
price that will be paid to growers from the next campaign, bringing
this price into better alignment with the market and with
prevailing EU sugar prices.
Sugar production at Illovo for the full financial year is
expected to be ahead of last year at some 1.75 million tonnes, with
campaigns extended to counter wet conditions which impacted
production in the early part of the season.
In China, very low levels of sugar content and purity in beet
have adversely affected operational performance at our factories at
Zhangbei and Qianqi. Combined with lower domestic sugar prices, the
business will make a loss this financial year compared to the
strong operating result last year.
Grocery
Sales for Grocery were 3% ahead at constant currency, 2% ahead
of last year at actual exchange rates and operating profit margins
on an underlying basis improved.
Progress continued at Twinings Ovaltine, with good growth in
Twinings which benefitted from recent new product launches. The
consolidation of tea production from Jinqiao, China to our existing
factory in Poland is nearing completion and adjusted operating
profit in the first half will include a one-time cost in respect of
this.
ACH in the US and George Weston Foods in Australia continued
recent progress by further improving margins. At Allied Bakeries,
discussions with our customers to reduce the losses continue.
Agriculture and Ingredients
AB Agri revenue was 5% ahead of last year at constant currency
and actual exchange rates.
Sales in Ingredients were 6% ahead of last year at constant
currency and 1% ahead at actual exchange rates.
For further enquiries please contact:
Associated British Foods
John Bason, Finance Director Tel: 020 7399 6500
Citigate Dewe Rogerson
Chris Barrie, Jos Bieneman Tel: 020 7638 9571
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END
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