Primark-owner AB Foods’ first-half profit held back by sugar

LONDON (Reuters) – Associated British Foods (ABF.L) on Tuesday reported a 1 percent fall in first-half profit, with a resilient performance at its Primark fashion business offset by a previously flagged dip in the performance of its sugar business.

FILE PHOTO: The exterior of a Primark store is seen in central London, Britain, November 3, 2017. REUTERS/Toby Melville/File Photo

In January AB Foods had warned that revenue and profit from sugar would fall more than previously forecast in 2017-18 because of lower prices across the European Union.

For the six months to March 3 the group, which also owns major grocery, ingredients and agriculture businesses, made adjusted operating profit of 648 million pounds. That compares with company guidance of a “flat” outcome and 652 million pounds made in the first half of its 2016-17 year.

Group revenue rose 2 percent to 7.42 billion pounds.

On a constant currency basis sales and profit growth was achieved in all of the divisions, other than sugar, where the reduction was as expected.

The group maintained its full-year outlook, forecasting “progress” in both adjusted operating profit and adjusted earnings per share (EPS).

It forecast a second-half acceleration in profit growth at Primark, due to margin improvement, and continued profit growth from the other non-sugar businesses.

“These should more than offset the decline in profit at AB Sugar in the balance of the year,” said Chairman Michael McLintock.

Shares in the group, down 23 percent over the last six months, closed Monday at 2,583 pence, valuing the business at 20.3 billion pounds.

The group is majority-owned by the family of Chief Executive George Weston.

Reporting by James Davey, Editing by Paul Sandle

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