AB Foods full-year results exceed expectations, strong Primark

5th Nov 2013 07:03

- Full-year results beat expectations - Stunning Primark performance, weaker Sugar trading- Earnings per share for year ahead expected to be similar to 2013- 2014 EPS outlook implies progress elsewhere, Credit Suisse saysAssociated British Foods delivered a better-than-expected set of annual results following a strong performance from Primark, an improvement in Grocery while trading at Sugar was in line with company expectations.Group revenue rose 9% to £13.3bn for 52 weeks ended September 14th while adjusted operating profit climbed 10% to £1.2bn. Adjusted pre-tax profit was up 13% to £1.1bn and adjusted earnings per share jumped 13% to 98.9 (Consensus: 98.2p).Operating profit for the period rose 25% to £1.1bn and pre-tax profit increased 15% to £876m. Basic earnings per share rose 6% to 74.8p.Primark enjoyed a strong year, with profit up by 44% and sales increasing by 22% as it increased its estate by 10%. Both the autumn/winter and spring/summer ranges sold out this year with little discount, the group said.Analysts at Credit Suisse wrote that they would draw two things from the statement, Northern Continental European margins are already good and 2014 will see a pick-up in space expansion with over 1m square feet being added.Elsewhere, Grocery margins improved after a recovery in both the baking and meat businesses of George Weston Foods in Australia. Recent momentum in AB Agriculture continued and underlying trading in Ingredients achieved some stabilisation, the group explained. AB Sugar delivered results below last year's high level as a result of lower European production and higher beet costs for British Sugar.Chairman Charles Sinclair said: "We expect a further reduction in profit from AB Sugar next year as EU sugar prices fall and the market rapidly adjusts ahead of regime reform in 2017." AB Food said Primark's continued expansion together with revenue growth and margin improvement in Grocery are expected to deliver further increases in profit. Lower borrowings and reduced long-term financing this year underpins its confidence that adjusted earnings per share for the coming year will be similar to 2013, it explained.A full-year dividend of 32.0p has been offered, up 12% from last time. The company's level of net debt decreased to £804m, versus the £922m forecast by Credit Suisse. Lastly, the Swiss broker pointed out that the company's outlook for EPS next year to be similar to 2013 actually implies good progress elsewhere. That is because the firm will next year drop circa £100m in profits from EU sugar.As of 14:09 shares of AB Foods were falling by 2.35% to the 2,202p level. The company's shares have risen by 41% year-to-date. CJ