ABF surges on plans to open first Primark stores in US

23rd Apr 2014 07:13

- Performance bolstered by strong Primark performance- Plans Primark store openings in the north-east of the US- Increases dividendAssociated British Foods (ABF) said it delivered a resilient interim performance, at a challenging time of transition for its European sugar business, and continues to expect adjusted earnings per share (EPS) for the year to be similar to 2013.The owner of the Primark clothing chain said adjusted pre-tax profit rose 4% to £468m for the 24 weeks ended March 1st 2014 while revenue for the period slipped 2% to £6.2bn. Revenues from continuing operations at constant currency were 1% ahead.Operating profit rose 2% to £463m and basic earnings per share advanced 12% to 43.2p. Adjusted earnings per share climbed 10% to 45.8p.Looking forward, the company confirmed previous suggestions and said it planned to launch its first stores in the US, beginning in Boston. Analysts at Panmure Gordon believe the launch will be a success, as the brand has already been across a wide range of European economies, and said this could "theoretically double Primark's long-term growth potential".But for the half-year the group said previous indications of lower sugar prices will result in a "substantial" reduction in profits from Sugar this year and that if the current strength of sterling continued it would have a greater impact on translation of overseas results in the second half. However, with further store expansion planned for the remainder of the year, Retail profits are expected to be "well ahead". "When combined with improvements in Grocery and Ingredients and a lower interest charge, we continue to expect adjusted earnings per share for the financial year to be similar to 2013," the group said in a company statement.Primark, which revealed it planned to open stores in the north-east of the US, saw like-for-like (LFL) growth of 4%, following the 7% achieved in the first-half last year, and with a higher operating profit margin.In contrast, sugar has been a bitter pill for AB Foods as it battles against the decline in sugar prices. A dividend of 9.70p per share has been recommended, up 4% from last time. The group reported net debt of £827m after net capital investment of £328m. CJ