AB Foods ups profit guidance as Primark sales accelerate in Q3

10th Jul 2014 08:10

- Adjusted EPS to improve this year- Primark sales up 22% at constant FX- FX still a headwindPrimark owner and food ingredients group Associated British Foods (ABF) has raised its profit guidance for the full year as strong growth at the value fashion retailer outweighed weakness elsewhere.Retail, which accounts for over a third of group revenues, was ABF's only division to show growth during the third quarter, with Primark sales rising 19% in the 16 weeks to June 21st, up 22% at constant currency rates.This was a decent pick-up from the 13% constant-currency growth registered in the first half of the year, helped by like-for-like (LFL) progress, further increases in selling space and "superior sales densities" in new stores, the company said. A warmer March and April than last year also helped LFL growth.Sugar revenues dropped by 26% at actual rates on the back of lower sugar prices in Europe, while Agriculture weakened 11%, Grocery fell 12% and Ingredients contracted 5%.Group revenues at actual rates declined by 3% during the 16-week period, but were up 3% at constant currency.ABF said that a strengthening pound and weaker euro have had a negative impact on the translation of sales and profits from overseas businesses, particular in Grocery and Ingredients. It continues to forecast a £50m hit from currency on full-year adjusted earnings if current FX rates prevail.Nevertheless, the company said: "Full-year adjusted earnings per share are now expected to be ahead of last year, with better profit progress in Retail, Grocery and Ingredients offsetting the adverse effects of lower sugar prices and the strengthening of sterling."The company had previously said it expected adjusted earnings to be "similar to 2013". The stock was trading around 2% higher at 3,052p in early trading on Thursday.BC