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In a trading update ahead of its annual general meeting, Associated British Foods (ABF) reiterated its outlook of further profit and margin growth in its Grocery division, as well as strong Primark performance.
The company’s struggling Sugar division is also expected to recover, benefiting from higher EU prices and cost reductions, chairman Michael McLintock added in his AGM statement.
He said: “This year, AB Sugar will benefit materially from the increase seen last year in EU sugar prices and from further cost reduction. We expect another year of strong profit and margin growth in Grocery, with Twinings Ovaltine in particular benefiting from a more efficient tea supply chain.”
Primark, ABF’s fast-growing fashion chain, will continue its store opening programme, with a number of locations to be opened in France and Spain.
It currently operates from 376 stores worldwide.
However, Primark margins are expected to be slightly lower than the previous year, with the effect of a weaker sterling being “largely offset by cost reductions” in both the cost of goods and overheads.
With regards to Brexit, McLintock confirmed ABF had completed “all practical preparations” and contingency plans were in place to manage disruption.
“Taking these factors into account we still expect progress in adjusted earnings per share for the group for this financial year,” he concluded.
ABF shares opened 1.85 higher at 2,541p.
Morning update
The FTSE 100 started the day up 0.3% at 7,160.92pts.
Early risers included DS Smith (SMDS) up 1.3% to 356.40p, British American Tobacco (BATS) up 0.5% to 2,969.50p and Just Eat (JE) up 0.7% to 779p.
Fallers saw Kerry Group (KYGA) down 0.9% to 116.20p and Devro (DVO) down 2.5% to 165p.
Yesterday in the City
The FTSE 100 closed 0.7% lower at 7,137.85pts, continuing the slump which characterised almost the entire week.
Ending in the red, DS Smith (SMDS) was down 7.2% to 351.80p after reporting its interim results, fellow packaging company Smurfit Kappa Group (SKG) was down 3.5% to 2,606p and AG Barr (BAG) closed 3% lower at 552p.
Unilever (ULVR) was down 1% to 4,475p and Imperial Brands (IMB) closed down 1.1% at 1,688.80p.
Risers saw Morrisons (MRW) up 2.2% to 197p, Sainsbury’s (SBRY) up 1.2% to 216p and Marks & Spencer (MKS) up 1.1% to 193.20.
Fevertree (FEVR) closed 2.3% higher at 2,206p and Greencore (GNC) up 1.4% at 244.60p.
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