Associated British Foods: full year expectations unchanged

Primark, ABF’s jewel in the crown, to record sales growth of just 1% .

Shares of Associated British Foods plc (LON:ABF) traded down 0.924% during mid-day trading on Monday, hitting GBX 3110.000.

ABF said the strength of the pound and the weakness of the euro as well as some Asian currencies would also mean a £30m hit to profits translated into sterling in the year to 12 September and more than that next year. Prices in China increased during the year, as a effect of lower domestic production and reduced imports.

Investors have reacted badly to the update and shares are down this session 2.5 per cent, or 71.0p, at 3,070.0p.

Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers, said that despite the new store openings, growth at Primark was not as rapid as had been hoped.

ABF said profits at George Weston would be ahead of previous year: “Bread margins were lower as retailers featured bread in their drive for lower prices with heavy price promotion activity which more than offset the benefits of a cost reduction programme across all bakery sites”.

It added that over the year it will open nearly one million square feet of selling space, including its first U.S. store in Boston as well as outlets in the Netherlands, Belgium and Germany, and a relocation to larger premises in Northampton. Indeed, the retailer detailed today how “significant investment” has been made in warehouse infrastructure across its global territories, with further expenditure planned for 2015/16.

At AB World Foods, Patak’s and Blue Dragon lost some non-core business leading to lower revenues though an improved sales mix drove an overall margin increase and so operating profit will be ahead of past year.

“A good proportion of the impact has been successfully mitigated by our buying teams as they firm up orders for next year”, it said in its statement.

It will report its full year results on November 3.

It will also be another record year at its Agricultural division, with “strong performances across all businesses”.