Like-for-like sales at ABF Primark unit slightly below forecasts -UPDATE

9th Sep 2013 07:04

- ABF expects second-half operating profits ahead of expectations - Primark like-for-like sales slightly below analysts' forecasts- Investec: Sugar bubble deflatingIn an update prior to entering the close period for its full year results Associated British Foods (ABF) said a strong finish to the year from Primark will help it deliver adjusted operating profit ahead of expectations for the second half. The London based food, ingredients and retail group said net interest expense in the second half will be well below last year's charge while the underlying tax rate for the year will be slightly lower than that used in the interim results.Adjusted earnings per share for the full year will show good progress, it added.Among its divisions, sales at Primark for the full year are now expected to be 22% ahead of last year at actual exchange rates, which benefited from the recent strengthening of the euro, and will be 21% ahead at constant currency. Primark's results were boosted by an increase in retail selling space. Like-for-like (LFL) sales growth is expected to be close to 5% for the full year. On this point, according to Bloomberg data the analyst consensus was looking for an improvement of 5.2%, with a range of between 5% and 6.5%, broker Investec points out.Meanwhile revenue and adjusted operating profit at AB Sugar for the full year will be in line with management expectations, the company said. However, looking forward to 2013/14 crop yields are expected to be slightly below average, although the firm expects sugar production to at least achieve sales quota and to meet our bioethanol requirement.On this point Investec adds that the "bubble" in sugar prices is "deflating" with, "commentary corroborating our intelligence that pricing in EU Sugars is getting tough, with market prices for fiscal year 2014 down by as much as €120/tonne (relative to a reference base of mid to high €700s/tonne in fiscal year 2013) and initial ABF guidance given at the first half point of '€10s/tonne lower'. ABF are guiding to Sugars profits in fiscal year 2014 in the mid-£300m's, relative to our current forecast of £400m."Elsewhere in Agriculture, the company is expected to deliver full year revenues and profit substantially ahead of last year. Grocery revenues continued to improve during the second half and will also be ahead of last year for the full year.Ingredients revenue for the full year is expected to be ahead of last year and underlying operating profit in line."[...] with the FY12/13 Sugars profit bubble deflating, it is now Primark that needs to carry the profit can for ABF going forward."As of 09:39 shares of Associated British Foods are down by 2.54% to the 786.5p mark. CJ