AB Foods share price slides on bitter half-year results

Shares in Associated British Foods (LON:ABF) have slumped this morning after the retail and food company reported lacklustre half-year results as strong growth at its budget fashion chain Primark was outweighed by a weaker sugar business.

AB Foods reported a 51 percent drop in pretax profit in the 24 weeks to February 28 to £213 million from £434 million the year before. Operating profit, not taking into account losses on sale and closure of businesses and exceptional items, was down by five percent to £474 million on revenues of £6.25 billion — one percent up from £6.21 billion.
Primark sales rose 15 percent at constant currency, underpinned by an 11 percent rise in retail selling space. AB Foods revealed that the chain’s much-anticipated plans for entry into the US were “well advanced”. Meanwhile, the company’s struggling sugar division continued to weigh on overall perfromance, as sugar prices in the EU have dwindled significantly. The unit made an operating loss of £3 million, but a small profit is expected for the full year, according to AB Foods’ latest estimates.
The company’s report further revealed that the recovery at its ingredients segment had continued with a robust increase in profit, agriculture maintained its recent trend of operating profit growth, and grocery continued its own trend of margin improvement in what remains a difficult trading environment. Chief executive George Weston commented: “This is a sound trading result with significant progress made in operating profit by Primark, Agriculture and Ingredients, and further improvement in Grocery’s margin. As expected, profitability at AB Sugar was substantially lower as a result of much weaker EU sugar prices.”
AB Foods’ board declared an interim dividend of 10p a share, an increase of three percent on last year.The group also revised its outlook for adjusted full-year earnings, warning that currency headwinds were now expected to lead to a “modest decline”, having previously signalled a “marginal decline” in profits.
Ab Foods’ share price has been trading around three percent lower since the release of its interim results this morning. As of 10:02 BST, the stock was changing hands at 2,779.00p – 2.93 percent down intraday.
As of 10:45 BST, Tuesday, 21 April, Associated British Foods plc share price is 2,741.00p.

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