Associated British Foods, the home of Twinings Tea and the Primark fashion chain, has posted a trading update ahead of its full year results, for the 52 weeks ending 16 September, which are scheduled to be announced on 7 November.
In its third quarter results, the company reported that it was expecting an improvement in the full year underlying performance as a result of a stronger profit delivery from Primark.
Since then, the group says that it has experienced an even lower level of markdown, which has further improved its full year outlook, and expects adjusted operating profit to increase on last year.
Revenue from the company's grocery businesses is expected to be level with last year, however, adjusted operating profit is expected to be lower.
The group's Twinings brand experienced further sales and profit growth. The group reports that it 'performed well' in its core markets, and gained further value share in Australia, the US and France.
However, margins declined at Allied Bakeries as a result of a competitive UK bread market and inflationary cost pressures.
Meanwhile, Jordans and Doreset cereals continued their international expansion, although in the UK faced increased competition from supermarket private label brands.
AB Sugar's revenue and adjusted operated profit will be well ahead of last year, according to the company.
Sugar production in the UK this year was unusually low due to the reduction in the contracted growing area in order to reduce the high level of stocks brought forward from the prior year.
Looking ahead, the company says that the crop is developing well in Europe, following favourable weather conditions. In the next year, sugar prices are anticipated to fall below those achieved in the current year, however, this will be mitigated by higher production volumes and the strength of the euro against the pound.
In this trading update, Associated British Foods also announced that it has reached an agreement to acquire Acetum, one of the leading Italian producers of balsamic vinegar, which generated net sales of €103 million in 2016.
Meanwhile, last week the group reported that Michael McLintock has been appointed as a non-executive director of the company, effective 1 November 2017.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.