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April 24, 2012

UK: ABF eyes “substantial” FY growth as H1 profits climb

Associated British Foods has said it expects "substantial" growth in full-year earnings after its first-half results benefited from a strong performance by its sugar division and Primark.

Associated British Foods has said it expects “substantial” growth in full-year earnings after its first-half results benefited from a strong performance by its sugar division and Primark.

For the six months to 3 March, pre-tax profits climbed 3.1% to GBP329m (US$531m), with earnings per share increasing to 31.7 pence from 30.6 pence in the prior-year period.

Operating profit rose 6% to GBP378m, while revenues increased 11% to reach GBP5.77bn.

Sales at ABF’s sugar division, which includes the Silver Spoon brand, rose 17%. Operating profit from the unit rose 59% helped by higher prices in the UK, Spain and Africa.

Grocery sales grew 4% to GBP1.81bn, but operating profit declined partly due to restructuring costs at George Weston Foods in Australia and Allied Bakeries in the UK.

Despite this, chief executive George Weston said: “The group delivered good growth in revenue and profit. AB Sugar and Primark both performed strongly, demonstrating continuing momentum. We expect substantial growth in both adjusted operating profit and adjusted earnings per share for the group for the full year.”

Chairman Charles Sinclair said he expects “strong profit growth” from Primark in the second half and AB Sugar’s investment over recent years, to “more than offset” the lower profit in grocery and ingredients.

“We continue to expect this to result in substantial growth in both adjusted operating profit and adjusted earnings per share for the group for the full year,” he added.

Click here to view the full earnings release and click here for coverage of ABF’s conference call with analysts on the results, in which it discussed the outlook for its grocery business.

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