AB Foods 1st Half Earnings Boosted By Primark, Grocery; to Open Stores in US

By Razak Musah Baba

LONDON--Associated British Foods PLC (ABF.LN) Wednesday posted a rise in half-year profit, mainly due to strong performances from its Primark chain and grocery units, adding that Primark plans to open stores in the north-east of the U.S.

The international food, ingredients and retail group recorded a pretax profit of 434 million pounds ($729.6 million) during the half year ended March 1, 2014, compared with GBP411 million a year earlier, on revenue of GBP6.21 billion, compared with GBP6.33 billion a year earlier.

The results were "achieved with the benefit of strong performances from Primark and grocery, an encouraging improvement at ingredients and a lower interest charge which was, in large part, due to the group's strong cash flow," Chairman Charles Sinclair said in a statement.

"Looking beyond this current financial year we have a good pipeline of new stores.

"We have decided to take the Primark concept to consumers in the north-east of the U.S.," he added.

Negotiations are under way to open further stores in the north-east through to the middle of 2016, Mr. Sinclair said.

AB Foods said, lower sugar prices will result, as previously indicated, in a substantial reduction in profit from sugar this year and the current strength of sterling, if maintained, will have a greater impact on translation of overseas results in the second half.

However, as Primark builds upon the success achieved in the first half and with further store expansion planned for the remainder of the year, profits from the retail unit are expected to be well ahead.

"When combined with improvements in grocery and ingredients and a lower interest charge, we continue to expect adjusted earnings per share for the financial year to be similar to 2013," the chairman added.

Shares in the company closed Tuesday at GBP27.22, valuing the company at GBP21.55 billion.

Write to Razak Musah Baba at [e-mail]; Twitter: @Raztweet

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