Associated British Foods PLC Interim Management Statement (7164V)
January 17 2013 - 1:00AM
UK Regulatory
TIDMABF
RNS Number : 7164V
Associated British Foods PLC
17 January 2013
17 January 2013
Associated British Foods plc
Interim management statement
Associated British Foods plc today issues an interim management
statement for the 16 weeks to 5 January 2013, in accordance with
the requirements of the UK Listing Authority's Disclosure and
Transparency rules.
Highlights
-- Group revenue up 10%
-- Outstanding sales performance from Primark
-- Trading for the remaining businesses in line with expectations
Trading performance
Group revenue for the first 16 weeks was 10% ahead of last year.
Revenue growth by business segment was:
16 weeks to 5 January
2013
Sugar 12%
Agriculture 3%
Grocery level
Ingredients level
Retail 25%
Total group 10%
Sterling has strengthened against all of our principal foreign
currencies, compared with the first quarter last year, with the
exception of the Australian dollar which is unchanged. The increase
in revenue for the group on a constant currency basis was 13%.
Sugar
Revenues were 12% ahead of last year.
UK revenues in the period were ahead of last year with higher
sales volumes compared with last year's abnormally low level, and
marginally higher sugar prices. Poor growing conditions during 2012
resulted in a lower beet yield and sugar content. As a consequence
the UK campaign started later and will have lower factory
throughputs to allow for a slower filtration process. Sugar
production for the current year is estimated at 1.13 million tonnes
compared with last year's 1.32 million tonnes. Profit for the
current year is expected to be lower than last year as a
consequence of the lower production, higher beet cost and a weaker
euro. The Vivergo bioethanol plant is now operational.
In Spain, heavy rains delayed planting in the south which is
expected to reduce the size of the crop. We nevertheless expect to
achieve overall quota sugar production volume in the current
financial year but profit will be lower both because of a higher
beet cost and this year's sales including a higher proportion of
lower-margin, refined cane sugar.
Illovo's revenues benefited from higher production volumes in
South Africa, with increased cane yields and sugar content, and
with extended campaigns in Zambia and Swaziland. As a result we
expect profit for the full year to be ahead of last year.
Sales volumes in China were unusually low last year and, as a
result, this year's revenues were ahead despite lower prices.
Production campaigns are under way and a larger cane crop is
expected to increase sugar production in the south ahead of last
year. Sugar production in the north is expected to be in line with
that achieved last year, with the new Zhangbei factory fully
commissioned. For the full year, sugar profitability is expected to
be well below last year as a result of much lower sugar prices.
Agriculture
Revenue was 3% ahead of last year driven by UK feed sales and AB
Vista. Although sugar beet feed volumes in the period were ahead of
last year, they are likely to be constrained for the rest of the
year by the smaller UK beet crop. AB Vista's feed enzyme business
continued to make good progress particularly supported by the
success of the recently launched Quantum Blue. China revenues were
below last year with shortfalls resulting from lower demand for pig
and poultry feed. Frontier traded at similar levels to last
year.
Grocery
Revenue was level with last year. Twinings Ovaltine again
performed well with good growth for tea in the UK and the US and
for Ovaltine in its developing markets. Sales by the UK grocery
businesses were in line with last year and Allied Bakeries
recovered higher wheat costs through bread price increases. Sales
declined at George Weston Foods in Australia but the business
secured price increases for its Tip Top bread range at the end of
the period. Progress was made in the Don KRC meat business with
higher volumes and improved cost control. Revenue at ACH was level
with last year. Grocery profit for the full year is expected to be
ahead of last year benefiting from the non-recurrence of
restructuring costs in George Weston Foods and Allied Bakeries.
Ingredients
Revenue was level with last year. Yeast and bakery ingredients
revenues were close to last year across all regions. Good progress
was made in bakery ingredients' sales and margins. In China, yeast
quality and productivity was improved and there was some reduction
in molasses costs although the market remains competitive. The new
yeast manufacturing facility in Mexico is currently being
commissioned with first sales expected in the spring. At ABF
Ingredients, sales of extruded grain products were well ahead of
last year and protein and lactose prices remained strong.
Retail
Sales at Primark were above expectations, 25% ahead of the same
period last year and 27% ahead at constant currency. This was
driven by very strong like-for-like sales growth, a substantial
increase in retail selling space and superior sales densities in
the larger new stores. Like-for-like growth benefited from
comparison with weak sales during the unseasonably warm autumn of
2011 and good trading over the Christmas period.
This was an extremely active period for new store openings.
Retail selling space increased by 0.7 million sq ft since the
financial year end, and by 1.1 million sq ft, or 14%, since this
time last year. At 5 January 2013, 256 stores were trading from 8.9
million sq ft of selling space. We opened 14 new stores in the
period: six in Spain, four in the UK, one each in Germany and the
Netherlands and our first two stores in Austria. We also completed
the refurbishment and extension of our flagship store on Mary
Street in Dublin and relocated our store in Sunderland to a larger
site. The opening of our second store on London's Oxford Street,
with 82,000 sq ft of selling space, was a notable event in the
period. This pace of store openings will not continue for the
remainder of this financial year but we expect it to pick up again
in the next financial year. We expect to add a further 200,000 sq
ft of space this year. This will include the completion of
extensions to our Newcastle and Manchester stores, featuring the
new store design, and a new store in Frankfurt's Zeil, one of
Germany's premier shopping areas. Capital expenditure on new stores
and refits for the full year is expected to be similar to last
year.
Operating profit margin was higher than in the same period last
year, reflecting not only the benefit, as expected, of lower cotton
prices since last half year, but also better trading.
Financial position
The operating cash flow in the period was much better than last
year driven by higher profits, a lower working capital outflow and
a further reduction in the overall level of capital expenditure,
although investment in new stores for Primark continued at a level
similar to last year. Net debt at 5 January 2013 was GBP0.9bn,
unusually lower than last financial year end reflecting the
outstanding trading from Primark and the later start to the
European sugar campaigns.
Trading outlook
Year to date trading for the group was ahead of our expectations
driven by the outstanding performance from Primark, with the rest
of the group performing in line. As previously indicated, the full
year result for AB Sugar is expected to be lower than last year but
we anticipate that this will be more than offset by growth at
Primark and some recovery in Grocery. In light of the group's
current performance we now expect to make further progress in
adjusted operating profit for the full year, with the improvement
heavily weighted towards the first half.
For further enquiries please contact:
Associated British Foods
John Bason, Finance Director Tel: 020 7399 6500
Citigate Dewe Rogerson
Chris Barrie, Nicola Swift Tel: 020 7638 9571
Jonathan Clare Tel: 07770 321881
This information is provided by RNS
The company news service from the London Stock Exchange
END
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