(Alliance News) - Associated British Foods PLC on Tuesday reported decent Christmas sales at Primark, making up for a "slow start" to the first quarter for the high street retail arm.
The FTSE 100 listing's performance elsewhere was slightly mixed, however. Overall sales in its Ingredients and Agriculture arm declined, though they climbed in Grocery and Sugar.
Group sales in the first quarter ended January 6 rose 2.8% on-year to GBP6.89 billion. At constant currency, they expanded 5.4%.
In Retail alone, which houses Primark, sales were 7.3% higher on a year earlier at GBP3.38 billion. They rose 7.9% at constant currency.
"In the UK, total sales in the period rose by 4.5% with like-for-like sales up by 3.8%. Following the period's early warm weather challenges, sales grew strongly in the run-up to Christmas. Primark's market share reached a new record at 7.1% for the 12 weeks to 10 December, up 0.1 percentage point from last year," AB Foods said.
"We exited the period with stock levels in a good position. We continue to monitor the situation in the Red Sea but at this stage we do not expect any significant disruption to our supply chain."
On Primark, AB Foods said it feels "more confident" on its adjusted operating margin delivery for the full-year. AB Foods said the unit's gross margin has picked up.
"This should insulate us well against potential additional costs of supply due to the disruption in the Red Sea should they arise," it added.
Back in November, it predicted Primark would achieve an adjusted operating profit margin "above 10%", with a possibility of a more robust outturn depending on consumer demand. It would be a step up from the 8.2% achieved in financial 2023.
Away from Primark, AB Foods said grocery sales rose 1.8% on-year in the first quarter to GBP1.41 billion, registering a 5.4% climb at constant currency. Its grocery unit includes the Kingsmill baked goods products range and Twinings tea.
Ingredients sales fell 2.8% at actual currency to GBP698 million. They edged up 0.9% at constant currency, however.
Agriculture sales slumped 12% on-year to GBP572 million, or 11% at constant currency. Sugar sales were 3.8% higher at GBP825 million, registering a more convincing 13% rise at constant currency.
AB Foods said: "Our Grocery business performed well. Our US-focused brands, including our Stratas joint venture in edible oils, continued their strong performances from last year. Within international brands, Twinings traded well across its key markets. Ovaltine had a strong performance in Western Europe but was weaker overall as it continued to face challenges in Asia.
"In Ingredients, our yeast and bakery ingredients business AB Mauri also maintained the strong performance of last year with further growth in sales and profit. As expected, parts of ABF Ingredients were softer due to continued customer destocking. In Agriculture, sales were weaker although certain of the compound feed markets are beginning to show signs of recovery."
The company expects sugar production to be "significantly above last year despite the recent weather".
"This should bring production more broadly into line with historical production levels," it added.
Shares in the company traded 0.4% higher at 2,278.00 pence each in London on Tuesday morning.
By Eric Cunha, Alliance News news editor
Comments and questions to newsroom@alliancenews.com
Copyright 2024 Alliance News Ltd. All Rights Reserved.
AB Foods (ABF)