Associated British Foods Share Discussion Threads

[bountyhunter] 12/10/2006 21:49

britishbulls?

[crontab] 12/10/2006 12:42

Have just gone back in on this today. Lovely-looking bull flag...well that's the theory anyway.

[wassapper] 24/9/2006 18:42

That Was The Week That Was ... In Soft Commodities

By Sally White

Speculative interest in commodities has definitely slowed, according to US investment bank Morgan Stanley, with net inflows to commodity-linked mutual funds totalling US$107million so far this year, against US$3.8 billion for the same time of 2005. However, with the International Monetary Fund's latest commodity study showing that speculative positions follow commodity price movements, not the other way around, there is still potential running in a number of the soft commodities with a fundamental supply shortage. ... more ....

[cambium] 12/9/2006 11:30

UBS 'buy' with target upped to 1,015 pence from 990

[gateside] 12/9/2006 07:01

Innovative ABF holds out promise despite troubles

SHAREHOLDERS have endured rather than enjoyed George Weston's first 18 months as chief executive of Associated British Foods.
Shares in the food manufacturing group, which owns the Primark clothing chain, have underperformed the market average by about 10 per cent since Mr Weston took charge in April 2005. That is hardly disastrous, but in the context of the 100 per cent outperformance in the five years preceeding Mr Weston's accession, it is disappointing.

Thorough-going reform of outdated European Union regulations controlling sugar production has caused most of the damage. Reform was required, but it denied ABF a chunk of profitability. An ill-starred advertising campaign for ABF Kingsmill bread featuring Elvis Presley did not help, and yesterday the company had to admit that Primark, the retailing jewel that has sparkled for so long in the ABF crown, had lost its shine. Like-for-like sales at the chain have evaporated in the past quarter, where growth had run at 6 per cent in the first half of 2006.

Since ABF is 60 per cent controlled by his family, Mr Weston may feel the disappointment more than anyone. But while ABF has come up against a few difficulties in recent months, it is too soon to write off the company, or Mr Weston. The company has tackled regime change in EU sugar head on by buying into Ilovo, the southern African sugar producer. Ilovo sugar production can be pumped into the EU unconstrained by quota. In addition, Ilovo should continue to see strong and growing demand on its home soil.

At the same time the Primark difficulties must be kept in perspective. Like-for-like sales were growing at 12 per cent last year, so Primark is doing well to maintain the performance. Moreover, ABF will expand Primark's total trading space by 40 per cent this year, so the promise of handsome actual sales growth remains.

ABF, renowned in investment circles as being staid, is latching on to some interesting new development ideas. The link with BP, the oil company, to explore ways of producing biofuels from wheat and sugar beet is just one such example.

Despite recent share price weakness, ABF shares still look quite pricey. The prospective p/e ratio is 16 and the dividend yield is a mere 2.4 per cent so stock may continue to tread water for a while. But the shares are well worth holding.

[gateside] 12/9/2006 06:28

Energy costs and Primark slowdown to hit AB Foods

Associated British Foods signalled yesterday that profits will be lower this year than last after earnings from sugar dwindled, energy costs soared and growth of sales of discount clothing slowed.

Tougher global competition and a reduction of sugar-beet subsidies from the EU will hurt the company, which owns Silver Spoon and derives about a fifth of its profits from sugar. ABF plans to close two of six sugar beet factories next year.

Across the group, which also owns the Primark discount clothing chain, profits before tax are expected to fall to about £545m this year from £590m in 2005. Burgeoning energy costs will trim profits from ABF's bakery and discount clothing operations.

Primark accounts for about 30 per cent of group profits. John Bason, the finance director, declared the division was "going like a train", but not all analysts were convinced.

Underlying sales at Primark are expected to grow by 3 per cent this year.

Andrew Wood, an analyst at Sanford Bernstein, said: "The big news is the lack of like-for-like growth in Primark, which has been the jewel of AB Foods' business for some time. We do expect a recovery in operating performance in 2007 but continue to believe that investors will react negatively to the short-term disappointments."

Other analysts, including Merrill Lynch, said Primark sales fell short of estimates. However, Merrill expected the opening of further Primark stores to offset lower profits at British Sugar.

ABF said it was opening one Primark outlet a week, and had opened its first in Spain. The shares edged 0.5p higher to 820p.

[wassapper] 11/9/2006 06:14

That Was The Week That Was ... In Soft Commodities

By Sally White

Suddenly every country seems to be announcing woes with their wheat harvests. Prices been rising at the fastest monthly rates for seven years as India abandons import barriers to feed its growing population and first too little and then too much rain takes a toll across crops in Eurasia, the Pacific and North America.

While the supply/demand numbers would not scare a metals trader, a four per cent drop in the International Grain Council's forecast for this crop year of 593 million tonnes makes it the smallest for three years. The estimated 15 per cent drop in stocks to 117 million tonnes gives also gives a historically low number, encouraging forecasts of more price rises to come. .. more

[wassapper] 06/9/2006 08:44

Agriprods story ...

Partial Bid From ABF Leaves Illovo Sugar With Independence And Jo'burg Listing.

By Sally White

One of the world's food "quarries", South Africa provides a lot of food needs for a lot of European economies as well as African ones. Still, it was something of a surprise when major UK food company Associated British Foods (ABF), bid not for one of the best-known and largest exporters – a wine or fruit producer – but much lesser known Illovo Sugar. In fact, there was a battle over Illovo. ABF's British Sugar subsidiary won a controlling 51 per cent stake in the Johannesburg listed company in a battle with the French-owned international sugar group Tereos... more ...

[elsworth] 02/9/2006 21:35

This is now in my radar screen, ready to be shorted!!
Hope this helps

[chef] 01/9/2006 08:30

high PE, low yield, with too high a valuation put on primark and the sugar fuel project imho

[liquidkid] 01/9/2006 08:23

By what metric Chef? They're spending a billion on Primark which will expect to double selling space over the next year so of course that kind of investment is going to dilute current earnings. There's half a billion acquisition on sugar will add to eps growth of about 5% Clearly at 700 when factoring in the EU sugar risk it was damn cheap and was a rare oppportunity to invest, anything betyween 800 to 900 is fair considering most targets are close to £10. You have to pay the premium for the good companies.

[chef] 31/8/2006 09:00

And a too high valuation imho

[gateside] 29/8/2006 12:03

More than happy to hold this long term... excellent quality company, with an equally excellent management.

[liquidkid] 29/8/2006 07:19

Looks like more concentrated rumourmongering going on over the weekend in the Times and Independent - rumour it is set to become embroiled in a sugar price-fixing investigation in its British Sugar unit.

The primark bit was reported on the FT - "further concern about weakening sales at Primark"

This is classic sell on the rumour.

[linhur] 24/8/2006 12:56

Just reduced on the general whisper that the Primark sales growth may be pausing.Although extremely well run there is enormous competition and I am agreed the consummer will be spending their money on keeping warm this winter.

ABF has been buying a lot of businesses since George Weston came to power. Time to consolidate a bit and put some money back into the bank.After all he has spent £1bn plus and at the current stage it is not clear how successful that is.

Just IMHO
regards
Linhur

[gateside] 23/8/2006 12:50

Trading update is due on 11th September

[crontab] 15/8/2006 06:42

Sugar down 6% y'day. Today will be interesting for ABF.

[liquidkid] 01/8/2006 07:28

There should be a little more energy left to sweeten the price out of this one - it's only 20% up off a June low whilst TATE is up almost 30% off the low it set in May

[crontab] 11/7/2006 11:36

Ok, 50% out.

[crontab] 05/7/2006 07:53

The way this stock is behaving makes me feel there's a significant amount of upside. Perhaps the sugar reform stuff was overblown. Perhaps it's the bioethanol story. Perhaps it's the prospect of a sale of Primark. Perhaps it's the feeling that it's defensive. Perhaps it's the feeling that Primark must be doing well with the summer heat. Lord knows.

[forthurst] 04/7/2006 20:24

"Shares in Associated British Foods were a key feature, closing up 20-1/2 at 789-1/3, assisted by positive news regarding its European sugar business, leading UBS to reiterate its 'buy' rating in response.

Earlier, AB Foods said its British Sugar unit plans to close its beet sugar plants in York and Allscott and consolidate production at its remaining four plants in the UK.

The group also said it plans to buy the 83,000 tonnes of additional sugar quota available in the UK as a result of the EU sugar regime reforms." from ADVFN III Evening Euro Markets Bulletin.

[chef] 03/7/2006 11:26

No not yet as I think the PE is quite high and as a business it looks confused. Also looking at Tesco as aren't they opening a biofuels plant?

Personally would like to see ABF float or sell Primark but that doesn't look like happening soon. Alot more research to go for me.

[crontab] 03/7/2006 11:13

Chef - did you get some? I must confess this rise is nice, but it has a certain parabolism about it, which makes it a little unsettling.

[chef] 27/6/2006 10:31

Just started looking at these to buy in my ISA.

I like the POrimark and biofuelas side but think Primark should get floated off and the biofuels side is small

The sugar side should sort itself out the next 12 months and could be benefited from the biofuels venture

Costs are climbing on raw mats but can other sides compensate?

They look a buy to me but in this current market i can probably afford to wait.

Any thoughts anyone?