East Anglia: British Sugar profits to be in line with expectations, says owner ABF
Associated British Foods said today that annual revenues and operatiing profit from its sugar production business, which includes British Sugar, would be in line with management expectations.
And, in a pre-close statement ahead of its annual results, ABF said that strong summer trading and aggressive expansion had helped its budget fashion chain Primark ring up a 22% surge in annual sales and beat profit expectations.
Like-for-like sales at the chain rose 5% in the year to Saturday amid a recovering high street, while 16 new store openings across Europe and a strengthening euro also helped drive Primark’s sales hike.
Lower discounts during its summer sale also bolstered the chain’s profit margins for the year, its owner Associated British Foods (ABF) said.
Primark plans an “extensive” programme of openings in time for Christmas, and intends to add more than a million square feet of selling space during its new financial year, on top of about 800,000 sq ft opened this year.
Primark’s latest store opens this week in West Bromwich to give it 257 branches, while its first store in France will open in Marseille in December.
A warm autumn last year ensured a strong start to the financial year for Primark, although freezing temperatures during March and April subdued growth. But summer trading was strong, driving the profits and sales boost, ABF said.
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Analysts at Panmure Gordon hiked their underlying profit expectations for Primark to £505 million from £473 million, adding they expect “another strong year in 2014”.
Meanwhile ABF said its Kingsmill bread brand has leapfrogged Hovis to claim number two spot in the UK market, behind Warburtons.
Its Allied Bakeries business benefited from growing volumes and a contract to supply the Co-op from April, which hiked Kingsmill’s market share. But ABF added the market remains intensely competitive with some pressure on margins.
Silver Spoon sugar’s sales and profits will be lower than last year reflecting an “especially competitive” year, it said. Its Jordans and Ryvita brands had an excellent year, helped by advertising campaigns, while its Twinings tea brand grew sales in all its major markets.
ABF said that revenues and adjusted operatiing profit from its sugar production business would be in line with management expectations.
British Sugar produced 1.14m tonnes of sugar, lower than last year’s 1.32m tonnes as a result of poor growing conditions during 2012 which led to lower beet yields and sugar recovery.
However, the group said sugar prices generally remained strong in the second half, consolidating the full year impact of last year’s price increases.
Looking ahead to 2013-14, ABF said that crop yields were expected to be slightly below average but its expected sugar production to at least achieve sales quota and to meet its bioethanol requirement.
The group added that its agriculture business had built on its strong performance in the first half and would deliver full-year revenues and profit substantially ahead of last year.
“Our UK feed business saw strong demand for ruminant feeds, and poultry feed volumes grew in line with increased demand from UK consumers for locally sourced products,” it said.