AB Foods 1Q Trading Strong, Fiscal Year Outlook Remains In Line

Associated British Foods PLC (ABF.LN) Thursday reported strong first-quarter sales across its diversified portfolio, with sugar and grocery revenues boosted by sterling's weakness, while its Primark low-cost retail chain enjoyed better-than-expected trading over Christmas

The U.K. food producer and retail group said sales for the 16 weeks to 3 Jan. were up 21% from a year earlier. It expects full-year net earnings to be in line with expectations.

"The weakness of sterling, particularly against the euro and US dollar, has been a major feature of the period - with the main beneficiaries of currency translation being Grocery and Ingredients," the company said in a statement.

Grocery revenue was 21% ahead, helped by higher product prices and the acquisition of the Jordans business.

The company's ingredients businesses, almost entirely located outside the U.K., benefited significantly from the weakness of sterling against the U.S. dollar and the euro.

Sales and profit at Primark were up 18% on the year "reflecting the increase in retail selling space and very good like-for-like sales growth," it said, without giving comparable sales details.

Clothing retailers have had a tough Christmas as the consumer downturn took hold in the U.K. Last week, rival Marks & Spencer Group (MKS.LN) reported its worst trading figures in a decade.

AB Foods - which is 55% owned by the founding Weston family - operates Primark and produces food brands such as Twinings tea and Kingsmill bread. It also produces sugar in Europe through its British Sugar unit and has sugar operations in China and in Africa through its Illovo venture.

The company strengthened its position in the newly-stabilized European sugar market in December, with the purchase of Ebro Puleva S.A.'s (EVA.MC) Spanish sugar business, for EUR385 million.

The company's shares closed Tuesday at 675 pence, down 3% on the day and 15% lower since the start of the year - a fairly resilient performance for a consumer-facing stock.

Company Web site: www.abf.co.uk

-By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278; [e-mail]

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