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UPDATE 2-Primark profit could top forecast after robust post-lockdown trading

Mon, 7th Sep 2020 08:11

* Sees Primark profit "at least at the top end" of guidance

* Says Primark's fourth quarter trading has been strong

* Group earnings seen "significantly below" 2018-19

* Shares up 3.2%
(Adds detail, finance chief comments, shares)

By James Davey

LONDON, Sept 7 (Reuters) - Associated British Foods
on Monday forecast full-year profit for its Primark fashion
chain "at least at the top end" of previous guidance after
post-coronavirus lockdown trading exceeded its expectations.

Core earnings for the group as a whole for the year to Sept.
12 were, however, forecast to be "significantly below" 2018-19.
The hit to Primark's profit when its stores across Europe were
closed is seen outweighing a "very strong" increase in profits
for its sugar, grocery, agriculture and ingredients businesses.

Shares in AB Foods, majority owned by the family of CEO
George Weston, were up 3.2% at 0843 GMT.

In July the group forecast full year adjusted operating
profit for Primark in a range of 300-350 million pounds
($396-$462 million), down from 913 million pounds the previous
year.

Following the lockdowns, all Primark stores reopened during
May, June and July, and trading during the fourth quarter has
been strong, the group said.

AB Foods finance chief John Bason highlighted the latest
four-week UK market data for sales in all channels, including
online, which Primark does not have. The data showed Primark
achieved its highest ever value and volume shares for this time
of year.

"If there were any fears about Primark coming back having
been closed for three months, my goodness this (update) scotches
it," he told Reuters.

Primark expects UK sales since reopening to be 12% lower on
a like-for-like basis, with Europe and the United States down
17% and 9% respectively on the same basis.

It also forecast a "significant reduction" in a 284 million
pounds exceptional charge flagged in April against surplus
inventory.

AB Foods said fourth quarter trading in its food businesses
also exceeded expectations.

Its grocery division, whose brands include Kingsmill bread,
Twinings tea, Ovaltine and Jordans cereal, benefited from
increased sales in its key markets of the United States, Europe
and Australia.

The ingredients division benefited from increased demand for
yeast and bakery ingredients, particularly across the Americas
and China.

($1 = 0.7568 pounds)
(Reporting by James Davey; Editing by Jan Harvey and Emelia
Sithole-Matarise)

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