Primark and sugar lift AB Foods

13th Sep 2010 07:14

AB Foods expects its underlying results this year to be well ahead of last time as retail business Primark continues to power ahead, while sugar profits have recovered."Trading for the group since the half year has been strong resulting in a substantial increase in adjusted operating profit for the second half compared to last year," ABF said, adding "As previously indicated, earnings for the full year will show very good progress."Sales and profit at Primark will again be well ahead of last year. Like-for-like sales growth of 6% is expected for the full year driven by a very strong performance in continental Europe and continued good growth in the UK. ABF did caution that inflation may pose Primark some problems. Higher cotton prices and freight costs and the increase in VAT, implemented in Spain in July and planned for the UK in January, will put pressure on margins next year.Brokers also pointed out that the full year figure represents a slowing down in recent weeks. "Forecasts of a 6% increase in like for like sales at discount clothes store Primark during the 53 weeks to 18 September is down from 8% rise for the first six months. That implies a slowdown to 4% growth in the second half versus 9% the year before," Charles Stanley said. Elsewhere, sugar profit will be substantially ahead of last year driven by further growth in the EU, especially in the UK, and a strong improvement in China, ABF added.Grocery will report modest revenue growth in the second half with good results from the UK businesses being partly offset by a disappointing performance from George Weston Foods in Australia.