Last checked at 
LONDON (Alliance News) - Associated British Foods saw its shares slump Monday morning as the stock dropped to the bottom of the FTSE100, despite the company reiterating its guidance for earnings per share to be substantially higher this year, amid concerns that the poor performance of its Sugar business may offset the positive showings elsewhere.
The group recorded strong operating profit from its Primark and Grocery arms and an improvement in its Ingredients business.
AB Foods said it expects sales for its Primark discount clothing retail arm to be 17% ahead of last year in the twelve months to 13 September on a constant currency basis and up 16% at actual exchange rates, driven by an increase in retail selling space over the period; like-for-like sales growth is expected to be 4.5% ahead of last year and superior sales densities in its new stores, meaning sales per square foot.
However, the impact of sterling strength was particularly stark in the company's AB Sugar business, which once again weighed on its results. Revenue and operating profit are set to be substantially lower year-on-year on the back of falling European sugar prices, lower volumes from north China, and a currency translation impact on the unit's operating profit to the tune of around GBP20 million, AB Foods said.
British Sugar produced a total of 1.3 million tonnes of sugar this year, compared to 1.2 million last year, with good growing conditions extending into the mild winter period, resulting in a higher beet yield and sugar content than the year before. AB Foods said the current crop for the 2014/15 campaign has made good progress and said early indications suggest it could be well ahead of production levels for last year.
However, the company said the global sugar price is continuing to sit at an "unsustainably low" level of an average of 17 cents, well below the average cost of production.
The stock trades 5.00% lower at 2,765.00 pence per share, the biggest faller on the FTSE 100.
---------
Markets: UK equities are pushing lower Monday, with those stocks most exposed to the fallout of a potential vote in favour of an independent Scotland leading the falls, following a weekend poll that put the "Yes" vote ahead of "No" for the first time.
Following the record highs made by Wall Street on Friday, in the wake of a soft monthly jobs report, equities there are set to open a touch softer. The DJIA, S&P 500, and Nasdaq Composite futures are all pointing about 0.1% lower.
FTSE 100: down 1.2% at 6,774.10
FTSE 250: down 1.5% at 15,690.62
AIM ALL-SHARE: down 0.5% at 775.43
GBP-USD: down at 1.6120
EUR-USD: flat at 1.2945
GOLD: down at USD1,264.94 an ounce
OIL (Brent): down at USD100.02 a barrel
---------
Other Top UK Corporate News
----------
The British government has, for the first time, waded into the legal battle involving BP and payouts related to the Gulf of Mexico oil spill, saying US court rulings against the oil company raise "grave international comity concerns," the Financial Times reported Sunday. The FT cited a filing made to the US Supreme Court in which the UK government said BP had "gone to great lengths to restore the gulf coast" but was being forced to payout huge fines to individuals and business that were not affected by the spill. It warned the treatment of BP undermined confidence in fairly resolving disputes in the US and the "trust necessary for international commerce", the FT said.
----------
AstraZeneca said safety and efficacy data from its Phase IIa study of benralizumab for the treatment of chronic obstructive pulmonary disease were published in 'The Lancet Respiratory Medicine' medical journal. The study did not meet its primary endpoint, as benralizumab did not reduce the acute exacerbation rate compared with a placebo in the overall patient population. However, it did show "clinically significant improvements in lung function" in the overall population.
----------
Virgin Atlantic Airways is set to close its UK domestic airline only 18 months it was launched with a pledge to take on British Airways and to cut fares, the Sunday Times reported over the weekend. The closure of Little Red, started in March last year, will be a defeat for Richard Branson, Virgin Atlantic's founder, who said when the service was launched it would "stop BA dominating routes and driving higher prices", the paper said. Little Red started offering flights from London to three cities - Manchester, Edinburgh and Aberdeen - with the aim to then feed passengers into Virgin's long-haul network. It was created in response to the takeover of domestic carrier British Midlands Regional Ltd, known at BMI, by International Consolidated Airlines Group, the owner of BA.
----------
Old Mutual has had a GBP600.0 million takeover bid rebuffed by wealth manager Quilter Cheviot, Sky News reported late Friday. Sky News said it "understands" that the wealth manager was the subject of a recent Old Mutual bid, even though the wealth manager is considering a listing. The report said that Bridgepoint, the private equity firm which controls Quilter Cheviot, is "understood to have rejected the proposal on the grounds that it undervalued the company".
----------
The investigation being conducted by the UK's Serious Fraud Office into bribery allegations involving Rolls-Royce took a turn over the weekend, after it emerged two men arrested in dawn raids in February had their bail lifted, an indication they are likely to play no further part in the inquiry, the Sunday Times reported. Sudhir Choudrie and his son, Bhanu, were detained in February as part of a probe into bribery allegations made against the FTSE 100 aerospace company in Indonesia and China. Rolls-Royce was accused two years ago of paying USD20 million in bribes to Tommy Suharto, the son of the former Indonesian president.
----------
De La Rue has been chosen by the Bank of England as its preferred bidder in the tender for its banknote printing contract. In a statement, the Bank of England said it expects to sign the contract in October, subject to completion of assurance activities in relation to De La Rue's bid, finalisation of the contract, and the final award decision by the Court of the Bank of England.
----------
Veterinary pharmaceutical business Dechra Pharmaceuticals expressed confidence in its future prospects and hiked its total dividend for the year to end-June, as it saw pretax profit rise. Dechra Pharmaceuticals proposed a total dividend of 15.40 pence, up 10% from 14.00 pence in the previous year. The company posted a pretax profit of GBP21.4 million, up from GBP12.5 million, as it saw revenue rise to GBP193.6 million from GBP189.2 million.
----------
Balfour Beatty's UK construction business has been awarded a GBP42 million contract to redevelop the Faculty of Art, Design and Humanities at De Montfort University in Leicester. The project will include the refurbishment of a 12-storey teaching block, the construction of a new six-storey building, the conversion of a two-storey building and all associated mechanical and electrical work, creating 27,700 square metres of new teaching and support office space.
----------
AIM MOVERS
----------
Orogen Gold leads the AIM gainers Monday. The company said the new phase of drilling at its Mutsk project, in southern Armenia, has confirmed discovery of wide zones of gold mineralisation. Shares in GETECH Group are up after the company said it has won a new USD5 million proprietary services contract with the Angolan National Oil Company, Sonangol, giving it confidence of meeting current year market forecasts. Seeing Machines shares have been trading higher after the company said it has signed a memorandum of understanding with Samsung Electro-Mechanics Corporation, or SEMCo. Somero Enterprise is also up; the company expressed confidence of seeing "another strong year of growth ahead of current market expectations," as it saw its pretax profit rise in the half-year to the end of June. At the other end of the market, Roxi Petroleum shares have dropped after the company said it expects its new deep well, Airshagyl 6, in the BNG contract area in the west of Kazakhstan, to be spudded by the end of 2014, and will be located 2,000 metres from deep well A5. Shares in Kea Petroleum are trading down; the company said it looks to evaluate the suspended Douglas-1 well at its Tikorangi site and that its Puka-1 and Puka-2 wells have continued to produce steadily. Sierra Rutile shares are trading lower after the company said it is assessing the extent of the impact on its operations from the government of Sierra Leone's four-day lockdown to contain the Ebola virus outbreak.
----------
Top Economics And General
----------
UK house prices increased at a slower pace in August, survey data from Halifax showed. House prices grew 9.7% during three months to August after rising 10.2% in three months to July. The growth rate was forecast to slow to 9.8%. House prices in the three months to August were 3% higher than in the three months to May. Month-on-month, house prices gained only 0.1% in August, which was slower than the 1.2% increase seen in July. The monthly rate came in line with expectations.
----------
British Chancellor George Osborne promised Sunday that more powers would be transferred to Scotland after an opinion poll showed the Scottish independence camp ahead for the first time, days before a referendum on whether to split from Britain is due to be held. Pro-independence campaigners took a narrow lead with 51% of those surveyed in favour of leaving the 300-year-old union, while 49% were opposed. Undecided voters were excluded from the poll.
----------
Russia warned that it might restrict overflight rights for Western carriers, as the EU was set to grant final approval to new sanctions against Moscow over the conflict in Ukraine. Prime Minister Dmitry Medvedev said in an interview published Monday that Russia would react to new sanctions on its energy and banking sector. "If Western carriers (have to) avoid our airspace, this might cause the bankruptcy of many airlines, who already are fighting for survival," Medvedev told Moscow's Vedomosti newspaper. The prime minister added that sanctions were the wrong tool to achieve peace in Ukraine. "Sadly there is a desire to use force in international relations," he said.
----------
Fresh fighting in eastern Ukraine on Sunday threatened to undermine a fragile ceasefire between pro-Russian separatists and government forces announced a little more than 24 hours earlier. One woman was killed and three people injured in Mariupol, after the city's eastern outskirts were attacked during the night, the city council said.
----------
Sixteen militants were killed in an air raid on a northern Iraqi town, security forces said, as parliament prepared to vote on the cabinet of prime minister-designate Haider al-Abadi. The air raid on Tel Afar, west of Mosul, killed 16 members of the Islamic State jihadist organization, the National Iraqi News Agency reported, quoting military intelligence officials. The report came a day after officials claimed advances against the extremists around the Haditha Dam in the western province of al-Anbar after repeated US airstrikes.
----------
Ireland's construction sector activity continued to rise strongly in August, though at a slower rate than in July, survey data from Markit Economics showed. The Ulster Bank purchasing managers' index, or PMI, for the construction sector decreased to 61.4 in August from 62.6 in July. This marked the twelfth straight month of expansion in activity. A reading above 50 signals growth in construction activity.
----------
Germany's export grew more than forecast in July, while imports fell unexpectedly, data from Destatis revealed. Exports climbed 4.7% in July from June, while it was forecast to rise by 0.6%. In June, shipments rose 0.9%. Meanwhile, imports fell 1.8%, reversing the 4.5% increase in June. Imports were expected to grow by 0.2%. As a result, the trade surplus rose to seasonally adjusted EUR22.1 billion from EUR16.4 billion in June. On an unadjusted basis, the trade surplus totaled EUR23.4 billion versus EUR16.6 billion a month ago.
----------
Chinese trade surplus rose unexpectedly in August as exports surged to a record and imports unexpectedly declined, figures from China's General Administration of Customs showed. The trade surplus increased to USD49.83 billion in August from USD47.30 billion in July, with the August reading marking a 78% jump from the year-ago period. Economists had expected the trade surplus to decline from the previous month to USD 40 billion. Exports surged 9.4% year-over-year in August, a bigger increase than the 9% rise expected by economists, Nevertheless, this was slower than the 14.5% growth recorded in July. Meanwhile, imports declined 2.4% in August, dropping for the second straight month. Economists had expected imports to recover by 3% in August after the 1.6% drop in July.
----------
The Chinese Ministry of Commerce unveiled measures to make overseas investment by domestic companies easier. Only overseas investment in sensitive countries or regions, as well as in sensitive industries will need prior approval from the ministry, the Xinhua news agency reported Sunday. Sensitive countries or regions include those nations that have not established diplomatic ties with China and that are subject to United Nations sanctions, the agency said. The new measures will take effect on October 6.
----------
Japan's gross domestic product contracted a downwardly revised 7.1% on year in the second quarter of 2014, the Cabinet Office said in Monday's final reading. The reading marked the country's worst decline since the earthquake and tsunami in 2011, due in large part to a sharp decline in consumer spending following the implementation of a consumption tax hike in April. The headline figure missed forecasts for a downward revision to -7.0% after the August 13 preliminary estimate suggested a contraction of 6.8%. GDP had climbed 6.1% on year in the first quarter.
----------
Japan posted a current account surplus of JPY416.7 billion in July, the Ministry of Finance said on - down 31% on year. The headline figure was shy of forecasts for a surplus of JPY444.2 billion following the JPY399.1 billion deficit in June.
----------
Afternoon Watchlist (all times British Summer Time)
16:30 US 3-Month Bill Auction
16:30 US 6-Month Bill Auction
20:00 US Consumer Credit Change
---------
Tuesday's Key UK Corporate Events
Hilton Food Group Half Year Results
Hargreaves Services Full Year Results
Stadium Group Half Year Results
Synety Group Half Year Results
AbCam Full Year Results
Fenner Trading Statement
Corac Half Year Results
Dixons Carphone Trading Update
Safecharge International Group Half Year Results
Whitbread Trading Statement
Martinco Half Year Results
---------
Tuesday's Key Economic Events (all times British Summer Time)
00:01 UK BRC Retail Sales Monitor
00:50 Japan BoJ Monetary Policy Meeting Minutes
00:50 Japan Money Supply M2+CD
00:50 Japan Tertiary Industry Index
06:00 Japan Consumer Confidence Index
07:00 Japan Machine Tool Orders
07:45 France Budget
07:45 France Trade Balance EUR
09:30 UK BOE's Governor Carney speech
09:30 UK Industrial Production
09:30 UK Manufacturing Production
09:30 UK Total Trade Balance
09:30 UK Trade Balance; non-EU
12:30 US NFIB Business Optimism Index
13:55 US Redbook index
15:00 US Fed's Tarullo speech
15:00 UK NIESR GDP Estimate
16:30 US 4-Week Bill Auction
18:00 US 3-Year Note Auction
---------
Contact: +44 203 668 7440; newsroom@alliancenews.com; @AllNewsTeam
Copyright 2014 Alliance News Limited. All Rights Reserved.
