TIDMABF
RNS Number : 9336T
Associated British Foods PLC
12 January 2017
12 January 2017
Associated British Foods plc
Trading update
Associated British Foods plc today issues a trading update for
the 16 weeks to 7 January 2017 summarising the significant trading
developments since the last market update.
Group revenue
Group revenue from continuing operations for the 16 weeks ended
7 January 2017 was 10% ahead of the same period last year at
constant currency, with good growth delivered by all of our
businesses. As a result of the weakening of sterling in late summer
last year, sales from continuing operations at actual exchange
rates were strongly ahead with a 22% increase.
Retail
Sales at Primark were 11% ahead of those reported last year at
constant currency driven by increased retail selling space. Sales
were 22% ahead of last year at actual exchange rates.
Last year was a 53-week year for Primark and as a result, this
16 week period started one week later than last year. On a
comparable week basis, total retail sales at constant currency were
12% ahead and 23% ahead at actual exchange rates. The increase in
average retail selling space in this 16 week period, compared with
the same period last year, was 12%.
The UK performed well. Like-for-like sales for the period were
good and market share increased reflecting the strength of our
consumer offering. Like-for-like sales for the group were held back
by declines, albeit smaller than last year, in Germany and the
Netherlands, the latter particularly affected by the rapid increase
in selling space. New stores opened in the period traded strongly
and our business in the US continued to develop.
Stock was well managed again this period. As forecast, the
operating profit margin will decline as the year progresses
reflecting the strength of the US dollar on input costs. Foreign
exchange contracts are now in place for most of the remaining
purchases for this financial year.
We have started the year with a very strong programme of new
store openings. Retail selling space increased by 0.8 million sq ft
since the financial year end and, at 7 January 2017, 328 stores
were trading from 13.1 million sq ft. 15 new stores were opened in
the period comprising relocations in Reading and Sheffield to
larger, more central locations; new UK stores in Carlisle,
Stafford, Truro and York; Liffey Valley in Ireland; Mallorca in
Spain; Mannheim and Hamburg in Germany; Lille and Paris, Evry in
France; our second store in Italy in Brescia; an 89,000 sq ft store
in the centre of Amsterdam; and our sixth store in the US in
Burlington, Massachusetts.
Our store at the Tottenham Court Road end of Oxford Street in
London was extended by almost 40%, increasing square footage to
114,000 sq ft, making it one of our largest stores after Manchester
and Newcastle in the UK and Madrid, Gran Via in Spain.
We still expect to open 1.3 million sq ft in this financial
year.
Sugar
AB Sugar revenue from continuing operations was 22% ahead of
last year on a comparable basis at constant exchange rates. At
actual exchange rates revenue was 38% ahead. Higher sugar prices,
increased production in Africa, and further benefit from the
performance improvement programme delivered a substantial increase
in profit.
With 2016/17 forecast to be a second year of global sugar
deficit, world prices are much higher than last year. A tightening
of EU stock levels has strengthened domestic prices across the
region and in Africa, higher world prices and the strength of the
US dollar have resulted in higher domestic and regional prices.
In the UK, production is projected to be just under 900,000
tonnes as a result of a smaller beet crop and yields marginally
lower than last year. Sales are now largely contracted for this
year and with higher prices, lower beet costs and a weaker
sterling/euro exchange rate, British Sugar's full year operating
result will improve substantially.
Azucarera in Spain is expected to produce some 390,000 tonnes of
sugar from beet. In response to strengthening customer demand and
partly to compensate for a lower volume of beet sugar, the
Guadalete refinery will be substantially utilised this year. The
operating result will also benefit from higher sugar prices.
In China, we completed the sale of our five cane sugar factories
to a consortium led by Nanning Sugar on 22 December 2016 for total
proceeds, including debt assumed, of Rmb2.6bn (GBP297m). Tax
arising on the transaction is not expected to be material. Our two
beet factories in north China at Zhangbei and Qianqi, are operating
well and will process a record beet crop. Combined with higher
prices, this business is expected to deliver a much improved profit
this year.
Illovo has made good progress following last year's weather
related crop shortfalls and production this financial year is
expected to improve to 1.7 million tonnes compared with 1.4 million
tonnes for the same period last year. Revenue increased
substantially driven by higher volumes and prices, and benefiting
from the introduction of new consumer pack sizes. Cost reduction
from performance improvement initiatives in Zambia and Malawi
substantially mitigated local inflation.
Grocery
Grocery made further margin progress. Twinings continued to
achieve strong sales growth with particularly good performances in
the UK, North America and Australia, and Ovaltine performed well in
Asia. Continuing the momentum of last year, margins at George
Weston Foods in Australia were much improved. Allied Bakeries
volumes remained strong but pricing and margins remain
challenging.
On 21 November 2016 we completed the sale of the US herbs and
spices business for a gross cash consideration of $367m and the
assumption by the purchaser of net pension liabilities which at the
last year end amounted to $17m. Tax of some $100m will be payable
on the transaction in the current year.
Agriculture and Ingredients
Revenue at AB Agri was higher than last year with progress made
in all of its businesses. AB Mauri and ABF Ingredients both
achieved good revenue growth and margin will again show substantial
improvement.
Trading outlook
Our outlook is unchanged with progress expected in adjusted
operating profit and adjusted earnings for the group for the full
year.
For further enquiries please
contact:
Associated British Foods
John Bason, Finance Director Tel: 020 7399
Flic Howard-Allen, Head of External 6500
Affairs
Citigate Dewe Rogerson
Chris Barrie, Eleni Menikou Tel: 020 7638
9571
Jonathan Clare
Tel: 07770 321881
This information is provided by RNS
The company news service from the London Stock Exchange
END
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