UK MIDDAY BRIEFING: Associated British Foods Soars On Profit Boost

LONDON (Alliance News) - Associated British Foods said Wednesday profit for the first half of the year increased, driven primarily by sales at its low-cost fashion retail chain Primark, which more than offset a substantial hit to its sugar business.

The food, ingredients and retail group, which has led the FTSE 100 all morning, also raised its interim dividend by 4% to 9.70 pence per share. It said pretax profit rose to GBP434 million in the 24 weeks ended March 1 from GBP411 million a year earlier.

The firm said weak sugar prices will "substantially" reduce its sugar profit for this year. Primark, however, posted strong growth and now dominates the group's overall operating profit, with further store expansion planned for the remainder of the year, including its first US store, set to open in Boston in 2015.

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FTSE 100: down 0.2% at 6,671.97
FTSE 250: down 0.6% at 15,987.6
AIM ALL-SHARE: up 0.03% at 823.25
GBP-USD: down at 1.6801
EUR-USD: up at 1.3839
GOLD: up at USD1,286.45 an ounce
OIL (Brent): flat at USD109.36 a barrel

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Key UK Corporate News

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FTSE 100: Royal Bank of Scotland Group has been fined HKD6.0 million by Hong Kong regulators as a result of internal control failures relating to detecting and preventing unauthorised trading by its emerging-markets rates business in Hong Kong. ARM Holdings said that, assuming the semiconductor industry improves in the second half as it expects, it remained confident it would meet market expectations for dollar revenues in 2014. Sports Direct International said it delivered double digit growth in its gross profit and sales in the last nine weeks of its financial year, driven by strong retail growth both in its stores and online. Rolls-Royce Holdings has been awarded a USD39 million contract to support AE 1107C engines for V-22 aircraft operated by the US Marine Corps and Air Force. Reed Elsevier has reiterated its outlook for the full year, as it saw underlying revenue growth rates in its first quarter to end-March in line with the full year 2013. Retail property developer Hammerson said occupancy levels across its portfolio remains high at 96.6%, as economic recovery particularly in the UK generated confidence in its consumer markets. Wolseley has appointed ex-Carpetright CEO Darren Shapland to its board as a non-executive director, with effect May 1. British lender Barclays may have to eliminate 7,500 jobs at its investment bank to improve returns at its securities unit, Bloomberg said quoting a report by Sanford C. Bernstein. Oil giant BP has agreed to sell interests in four BP-operated oilfields on the North Slope of Alaska to Hilcorp, a privately-held independent oil and natural gas exploration and production company. BHP Billiton has officially opened its new Jimblebar iron ore mine 40 kilometres east of Newman in the Pilbara region of Western Australia.

FTSE 250: Drax Group said it has commenced legal proceedings against the UK government after it overturned a decision advising that two generating units at Drax Power Station were eligible for investment contracts under a new contracts for difference scheme. MoneySupermarket.com Group said its overall expectations for the year are unchanged after reporting an increase in first-quarter revenue and earnings before interest, tax, depreciation, and amortisation. Kentz Corp has been awarded a five-year contract by Fluor Kuwait Company with an estimated value of USD125 million. Spirent Communications reiterated its expectations of meeting high single-digit organic revenue growth for 2014, as it saw revenue rise in the quarter to end-March, boosted by revenues in its Service Assurance division that were delayed from 2013. Petra Diamonds said that production rose in the third quarter, which boosted revenues in the period, and said that it is firmly on track to meet its full-year production target. AMEC said that trading in the year-to-date has been in line with expectations, boosted by a good level of order intake and contract awards. Polymer products manufacturer Fenner reported a drop in pretax profit for the first-half, saying it was hurt by sterling's gains against all major currencies in which its revenues are generated. IP Group took another step towards integrating Fusion IP PLC, which was acquired in March, appointing the company's previous chief executive to the position of group chief operating officer.

AIM All-Share: Shares in Ironveld are trading higher after the pig iron developer said a recent definitive feasibility study reaffirmed the viability of its pig iron and ferro-vanadium project, and that it is on track to start construction of the project later this year, with production ready for late 2015. Rare Earth Minerals shares also have jumped; the rare metals and minerals projects investment company said an independent third party has verified that its joint venture partner Bacanara Minerals Ltd can produce battery grade lithium carbonate from the Sonora Lithium Project in Mexico. Biome Technologies is trading higher after the materials and electronic systems company posted revenues of GBP1.1 million in the quarter to end-March, up from GBP400,000 in the previous year and GBP500,000 in the previous quarter. Shares in Landore Resources are trading higher after the firm identified new potential nickel sulphide mineralisation zones at its Junior Lake Nickel-Copper Property in Canada. Fitbug Holdings is trading higher. The firm has appointed Bloomberg's former London head Malcolm Fried to succeed its departing Chief Executive David Turner with immediate effect. It also announced that it had signed an agreement with Griffin International Cos to act as its exclusive US sales representative to retail chains Target Corp, Best Buy Co and Wal-Mart Stores. Shares in Sable Mining are up; the company has announced an increase in its resource at the Nimba Iron Ore Project in Guinea following expansion exploration drilling on a limited area of its Plateau 3 site. At the other end of the market sits Iofina. The iodine producer has reduced its production forecasts for the year to "materially below current market expectations" due to its principal operator's planned fracking schedule. Orogen Gold also is firmly down; the group said its pretax loss for the full-year widened after it was hit by an impairment charge on the value of its Deli Jovan asset.

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Top Economics And General

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Policymakers of the Bank of England unanimously decided to maintain the key bank rate at a historic low of 0.50% and monetary stimulus at GBP 375 billion, the minutes of meeting held on April 9 showed. "With unemployment remaining above the 7% threshold, the Committee's August 2013 policy guidance therefore remained in place and no member thought it appropriate to tighten, or to loosen, the stance of monetary policy at the current juncture," the minutes said.
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Growth in the Eurozone private sector economy accelerated at its fastest pace in almost three years in April, survey data from Markit Economics showed. The composite output index rose unexpectedly to 54.0 in April from 53.1 in March. The latest reading was the highest since May 2011. Economists had forecast the score to fall marginally to 53. The PMI has now been above the 50.0 no-change level for ten consecutive months, signaling a continuous expansion of business activity since last July.
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An index monitoring manufacturing activity in China posted a score of 48.3 in April, the latest survey from HSBC and Markit Economics revealed. That was in line with forecasts and up from 48.0 in March - although the index remains below the boom-or-bust score of 50 that separates expansion in a sector from contraction.
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Bank of Japan Governor Haruhiko Kuroda said inflation may exceed the official estimate in the fiscal year ended March. Consumer price inflation was slightly higher in fiscal 2013 that the central bank's projection of 0.7%, he told a parliamentary session on Wednesday. The economy is still on track toward achieving stable 2% inflation.
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Failure to find debris from the missing Malaysia Airlines jet has prompted searchers in the Indian Ocean to rethink their tactics, news reports said. Unless an underwater search comes up with evidence of wreckage from flight MH370 in "the next few days" there will be a pause for a reassessment of the likelihood of finding a trace of the Boeing 777, The Sydney Morning Herald reported, quoting sources close to the investigation.
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US President Barack Obama on Tuesday toured the area devastated by a mudslide a month ago in Washington state. Obama took a helicopter ride over the town of Oso, which was buried when the side of a 1.5 kilometre, rain-drenched mountain gave way on March 22, killing at least 41 people.
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The death toll in the sinking of a South Korean ferry reached 128 Wednesday, the coast guard said, while the first distress call from the ship came from a passenger's mobile phone, CNN reported. Navy, coast guard and civilian divers were working to recover bodies from cabins on decks three and four and from a cafeteria on deck three of the Sewol, the Yonhap News Agency reported.
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Afternoon Watchlist (all times British Summer Time)

13:58 US Markit Manufacturing PMI Preliminary
14:45 US Markit Services PMI Preliminary
15:00 US New Home Sales
15:30 US EIA Crude Oil Stocks change

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Thursday's Key UK Corporate Events

AZ Electronic Materials Interim Management Statement
Berendsen Interim Management Statement
Pace Interim Management Statement
Henderson Group Interim Management Statement
AstraZeneca Q1 Results
Trap Oil Full Year Results
PuriCore Full Year Results
African Barrick Gold Q1 Results
Anglo American Interim Management Statement
Anglo Platinum Interim Management Statement
Premier Foods Interim Management Statement
Computacenter Interim Management Statement
Camellia Full Year Results
Cobham Interim Management Statement
Croda International Interim Management Statement
Mecom Group Interim Management Statement
Senior Interim Management Statement
Spirit Pub Company Full Year Results
Unilever Q1 Results
Delphi Automotive Q1 Results
Travis Perkins Interim Management Statement

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Thursday's Key Economic Events (all times British Summer Time)

00:50 Japan Corporate Service Price
00:50 Japan Foreign bond investment
03:00 China CB Leading Economic Index
07:45 France Business Climate
09:00 Germany IFO
11:00 UK CBI Distributive Trades Survey
11:00 EU ECB President Draghi's Speech
13:30 US Durable Goods Orders
13:30 US Initial Jobless Claims
13:30 US Continuing Jobless Claims
15:30 US EIA Natural Gas Storage change
16:00 US Kansas Fed manufacturing activity

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By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance

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