By Razak Musah Baba
LONDON--Associated British Foods PLC's (ABF.LN) retail brand
Primark is expected to help offset the adverse effects of lower
sugar prices and the strengthening of sterling, the company said
Thursday as it posted a 3% drop in total group sales during the
third quarter.
The diversified international food, ingredients and retail group
recorded a 26% drop in Sugar revenue on actual rates and down 20%
on constant currency rates during the 16 weeks to June 21, driven
by substantially lower sugar prices, weaker European Union sales
volumes and lower sugar production in North China.
However, Primark's revenue growth in the quarter accelerated to
22% at constant exchange rates bringing the year-to-date sales
increase to 17%.
"We have a very strong pipeline of new stores in Europe
extending over a number of years, the company said.
"With our current phasing of store openings, we now expect a net
increase in retail selling space in this financial year of 1.2
million square feet, which is actually 1.4 million square feet of
additions less 0.2 million square feet of closures arising where
old stores are too small or have been relocated," it added.
AB Foods expects the increase in selling space in the next
financial year to be a little less than 1.0 million square feet, to
be followed in the autumn of 2015 by a strong program of openings,
it said.
Also known for its Silver Spoon, Twinings, Ryvita and Ovaltine
brands, AB Foods said full year adjusted earnings per share are now
expected to be ahead of last year, with better profit progress in
its Retail, Grocery and Ingredients units offsetting the adverse
effects of lower sugar prices and the strengthening of
sterling.
Write to Razak Musah Baba at razak.baba@wsj.com; Twitter:
@Raztweet