Primark sales boost AB Foods outlook

Associated British Foods said first-half profit will be ahead of its own expectations, driven by buoyant sales at the Primark discount clothing chain.

Operating profit in the period ending March 2 will be higher than last year, while earnings per share will be "substantially" ahead, the London-based company said today in a statement.

Expectations for the year remain unchanged, with growth being weighted "heavily" toward the first half.

The first-half performance benefited from a 23 per cent sales increase at Primark.

Sales at Primark stores open at least a year are up 7 per cent, the company said, though that was less than the median estimate of nine analysts for a 9 per cent gain.

Primark's first-half strength will be partly offset by the sugar division, where profit will probably be lower because of a decline in China and a charge for mothballing two plants in the Asian country.

Sugar profit is also likely to decline for the year, the company said, citing reduced production, a higher beet cost and a weaker euro in the first half.

The stock fell 0.5 per cent to 1,830 pence in London on February 22, paring this year's gain to 17 percent. Agriculture profit will show "further progress" in the first half, the company said today, while earnings at its grocery unit will be "substantially improved" as last year's restructuring costs in George Weston Foods in Australia and Allied Bakeries aren't repeated.

Ingredients sales will be "in line" with last year as it sold more yeast and introduced new products in bakery, feed and specialty enzymes, AB Foods said.

Bloomberg