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Primark owner boosts revenues

6th Jul 17 11:07 am

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Associated British Foods today issued a trading update for the 40 weeks to 24 June 2017 which summarises the significant trading developments since the last market update.

Group revenue from continuing businesses for the 40 weeks ended 24 June 2017 was 10 per cent ahead of the same period last year at constant currency and 20 per cent ahead at actual exchange rates.  The results of the group in the third quarter were strong with revenue growth of 13 per cent  at constant currency and 20 per cent  at actual exchange rates.  The results to date reflect a material translation benefit from the devaluation of sterling following the result of the UK referendum on EU membership in June last year.  At current exchange rates, the translation benefit will be significantly less in the last quarter of our financial year.

The underlying operating performance of the group during the third quarter was ahead of our forecast as a result of a stronger profit delivery from Primark which has marginally improved our group outlook for the full year.  We continue to expect to report good growth in adjusted operating profit and adjusted earnings per share for the group.

References to growth in the following commentary are based on constant currency.


Revenue growth for AB Sugar remained strong in the third quarter with the continuing benefit of higher prices and increased production from Illovo in Africa.  Whilst world prices have recently fallen below last year’s level, this will have little impact on the current financial year with most sales contracts in the EU already committed.

UK sugar production for the 2016/17 year was 900,000 tonnes with a smaller contracted growing area than last year and lower beet yields.  Looking ahead to the post-quota environment that begins in the autumn, the contracted area for the 2017/18 season has been increased by a third.  The new crop is now well established and making good progress.

In north China, a record beet crop was processed this year and the new season crop is progressing well.  Prices have remained stable and, in May, China’s Commerce Ministry announced additional duties on sugar imports.

Illovo expects to produce 1.7 million tonnes of sugar this year compared with 1.4 million tonnes produced in the comparable months last year.  The season has started well with a good quality crop recovering from last year’s drought.

Sales at Primark in the year to date are 13 per cent ahead of last year at constant currency driven by increased retail selling space and growth in like-for-like sales.  At actual exchange rates sales continued to benefit from sterling weakness and are 21 per cent ahead year to date.

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