The parent company of Primark (Penneys in the Republic of Ireland), Associated British Foods, has announced that it expects full-year profits to be better than expected, due to a pickup in trading and favourable exchange rates.
In a 22 February statement, the company said that it expects some progress in adjusted operating profit, although it added that earnings per share are likely to be slightly lower.
'The weakening of sterling in recent weeks, particularly against the euro, will ease the effect of currency translation on this year’s results, assuming current rates prevail, reducing our previous estimate of £25 million to £10 million,’ the statement read.
ABF now only expects a marginal decline in adjusted earnings per share for the group for the full year.
When it comes to the group’s FMCG brands, Twinings achieved market-share gains for tea in the UK, Italy and the US, with sales of Ovaltine in Thailand stabilising with an improved margin.
Good progress was also made in Vietnam and Brazil, however, ABF also said that difficult economic conditions resulted in disappointing sales in Nigeria.
Bread brand Kingsmill grew its market share in the UK, seeing a significant increase in sales volume. However, bread prices remain at their lowest level in the UK in eight years, as retailers continue to choose it as a means of what ABF describes as ‘highlighting their value for money to shoppers’.
Revenues for ABF Ingredients are expected to be ahead of last year at a constant-currency rate, but a little lower at exchange rates. The ingredients business's operating profit for the half-year will be ahead of last year, strengthened by further recovery in yeast and bakery ingredients.
Even though AB Sugar has been affected by a slump in global sugar prices in recent years, it performed steadily in the first half of the year, aided by tightening EU and Chinese stock levels, which have strengthened domestic prices in those markets. However, ABF said that it doesn’t expect to see any benefit from price increases until next year.
Meanwhile, sales at Primark/Penneys are expected to be 7.5 per cent higher than in the same period last year at a constant-currency rate, and 4 per cent higher at actual exchange rates.
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Jenny Whelan. To subscribe to ESM: The European Supermarket Magazine, click here.