(Alliance News) - Associated British Foods highlighted a string of trading updates from UK consumer companies on Thursday.
AB Foods said its outlook is unchanged following a good first quarter for fast fashion store chain Primark.
Group sales for the 16 weeks to January 4 were up 4% year-on-year at constant currency, and 3% ahead at actual rates.
Sales at high-street chain Primark were up 4.5% year-on-year at constant currency and 3.0% ahead at actual exchange rates. This was, however, "almost entirely" driven by an increase in selling space. The like-for-like performance improved, AB Foods said without specifying numbers, driven by a marked upturn in the eurozone.
In the UK, Primark sales were up 4.0% driven by new selling space and a "marginal" decline in like-for-like sales. Sales in the eurozone were up 5.1% with the improvement in like-for-like sales seen in the final quarter of the previous financial year continuing. The US also delivered like-for-like sales growth.
"As expected, operating profit margin in the period decreased, with the effect of purchases contracted at a stronger US dollar exchange rate than last year but partially mitigated by cost reductions in both the cost of goods and overheads," said AB Foods.
In the current financial year, AB Foods expects to open 18 new Primark stores, with its first store in eastern Europe, in Ljubljana, Slovenia exceeding expectations.
Elsewhere in the AB Foods portfolio, Sugar revenue was up 7% at constant currency and Grocery sales flat, while Agriculture revenue was 10% ahead of a year ago and Ingredients sales up 3%.
The stock was up 2.1% in early dealings Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 3.52 points at 7,646.32
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Hang Seng: up 0.2% at 28,824.69
Nikkei 225: closed up 0.1% at 23,933.13
DJIA: closed up 90.55 points, 0.3%, at 29,030.22
S&P 500: closed up 0.2% at 3,289.29
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GBP: firm at USD1.3039 (USD1.3024)
EUR: soft at USD1.1147 (USD1.1159)
Gold: up at USD1,552.91 per ounce (USD1,549.30)
Oil (Brent): up at USD64.34 a barrel (USD63.70)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
0930 GMT UK Bank of England credit conditions survey
1000 CET France IEA oil market report
0830 EST US import and export price indices
0830 EST US advance monthly sales for retail & food services
0830 EST US initial jobless claims
1000 EST US manufacturing & trade: inventories & sales
1000 EST US NAHB housing market index
1030 EST US EIA weekly natural gas storage report
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The UK property market has been given a lift by the general election result, according to surveyors. The number of house sales taking place across the UK has increased for the first time in seven months, the Royal Institution of Chartered Surveyors report for December said. Agreed sales in London and East Anglia in particular saw an improvement, although sales reportedly weakened in Northern Ireland and Scotland. Inquiries from buyers are also now generally on the up, after previously falling back in November, the report found.
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Consumer prices in Germany rose by 1.4% on an average annual basis in 2019, the Federal Statistical Office of Germany said. The average year-on-year increase in 2019 was down on the 1.8% average rise seen in 2018. The deceleration was attributed to a marked slowdown in energy price inflation to 1.4% in 2019 from 4.6% in 2018. Turning to December, the annual German consumer price inflation rate was 1.5%, accelerating from 1.1% in November. December's reading marked the first acceleration since July.
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BROKER RATING CHANGES
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BARCLAYS CUTS GLAXOSMITHKLINE TO 'UNDERWEIGHT' (EQUAL WEIGHT) - PRICE TARGET 1650 PENCE
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JEFFERIES CUTS DIAGEO TO 'HOLD' (BUY) - PRICE TARGET 3600 PENCE
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BARCLAYS CUTS SPIRENT TO 'UNDERWEIGHT' ('EQUAL WEIGHT') - TARGET 190 (159) PENCE
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COMPANIES - FTSE 100
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Pearson said it met guidance in 2019 though predicts challenging trends in US Higher Education Courseware to continue. The educational publisher said underlying revenue was flat in 2019 and adjusted operating profit GBP590 million. US Higher Education Courseware revenue declined by 12%, though there was "modest" growth in digital revenue. Pearson said it expects the trends seen in the unit to continue, with heavy declines in print partially offset by modest growth in digital. For 2020, Pearson expects to deliver adjusted operating profit between GBP500 million to GBP580 million, including the 25% stake in Penguin Random House that it recently agreed to sell for USD675 million. Pearson said Chief Financial Officer Coram Williams will be leaving the company and will be replaced by Sally Johnson, deputy financial officer. Williams will step down from his position and from the board later this year.
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Whitbread said it delivered a "robust" third quarter despite challenging conditions in the UK. Total UK sales in the third quarter were up 0.3%, though fell 1.3% on a like-for-like basis. UK & International total sales growth was 1.0%. The start of the fourth quarter has seen more positive regional UK data due to lower comparators and the timing of Christmas, the company said, along with the continuation of the strong London market. However, "it is still early" in the fourth quarter and "a level of caution" remains on the UK hotel environment, Whitbread added. Looking into the 2021 financial year, Whitbread noted that the UK backdrop remains "uncertain" and sustained industry inflation continues. Whitbread said it will take a cautious approach to hotel demand and expects a net margin headwind of around GBP60 million, comprising wage inflation and ongoing investment, partially offset by its efficient programme.
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COMPANIES - FTSE 250
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Recruitment firm Hays expects a fall in first half revenue due to strikes in France, the bushfires in Australia, the UK general election, and a slowdown in activity in Germany. Hays said it expects operating profit for the first half of around GBP100 million, which would be down from GBP124.1 million a year ago. Group net fees for the second quarter, which ended December 31, fell by 7% on a headline basis and 4% like-for-like. Like-for-like net fees in its Temp and Perm businesses declined by 3% and 6% respectively. In Australia & New Zealand, net fees were down 7% like-for-like and Germany down 9%, while the UK & Ireland fell 4%.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Seawave Investment - the firm which, according to Lekoil, brokered a loan to the Nigerian oil firm from fake Qatari investors - will address the matter, the Financial Times reported. Lekoil late Monday said it parted, "in good faith" with USD600,000 to Seawave which acted as an introducer to those "purporting to be the Qatar Investment Authority". At the start of January, Lekoil announced it agreed a USD184.0 million loan from QIA for drilling and development at the Ogo field off the coast of Nigeria. Seawave's Managing Partner Bismarck Abrafi told the newspaper that the company will respond to the allegations. "We will issue a full statement and everything will be clear," Abrafi told the FT.
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COMPANIES - INTERNATIONAL
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The Japanese lawyer nicknamed the "Razor" who was spearheading Carlos Ghosn's defence said Thursday he is quitting the case after his client skipped bail and fled Japan for Lebanon. Junichiro Hironaka's office issued a brief statement saying they had "filed with the Tokyo District Court letters of resignation for all lawyers...connected with all cases related to Carlos Ghosn". Hironaka, 74, who earned his nickname for sharp legal strategies and an enviable acquittal record, has said he was "dumbfounded" by Ghosn's escape, which he discovered via the media on the morning his client fled. Another one of Ghosn's legal team, Takashi Takano, has also thrown in the towel on the case, a source close to his office told AFP.
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Thursday's Shareholder Meetings
Cardiff Property
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By Tom Waite; thomaslwaite@alliancenews.com
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