Associated British Foods has reported it is seeing a 'significant' improvement in profitability in the second half of its financial year, according to a trading statement.
The Primark owner noted that the second half has seen the company deliver 'good topline growth' and 'excellent cash generation', although its Sugar business is performing below expectations.
Primark Performance
Revenue at Primark is expected to come in 4% higher in the second half of the year, Associated British Foods said, driven by a continued store expansion programme.
Like-for-like sales are expected to decrease, however, by around 0.5%, with like-for-like growth of 0.2% in the third quarter followed by a likely decline of around 0.9% in the fourth quarter.
In the UK, sales are expected to be 0.5% lower for the half, or a like-for-like sales decrease of 2.0%, with footfall impacted by 'challenging weather', the company said. In Europe, sales growth is expected to be around 5%.
Grocery, Ingredients And Sugar
The group's Grocery business is expecting sales growth of around 3% in the second half, with its international brands delivering 'good growth' – Twinings has maintained 'strong sales momentum', while Ovaltine has delivered 'continued growth in Europe' as well as an improved performance in Thailand.
Elsewhere, its Ingredients business is expected to 'remain strong' in the second half, in line with previous expectations, however the performance of its Sugar business has been 'mixed', with a lower second-half profit expected.
The group cited 'sharper than expected' falls in UK and European sugar pricing, as a result of increased supply in the market.
"Notwithstanding this short‐term volatility in Sugar, we are optimistic about the outlook for the rest of the Group, which is well positioned for further strategic progress supported by continued reinvestment for the longer term," commented George Weston, chief executive.
