abf17 Jan 2013 22:13
First quarter trading update: An impressive performance at its retailing arm Primark helped underwrite a 5% plus gain in the share price as of mid-morning. Total sales at Primark rose by 25%. Management pointed to "very strong like-for-like sales" along with "superior sales densities in the larger new stores". The group also opened 14 new stores in the quarter, with six stores in Spain, four in the UK, one each in Germany and the Netherlands and its first two stores in Austria. Furthermore, operating profit margin was higher than in the same period last year, reflecting not only the benefit, as expected, of lower cotton prices but also better trading.
Elsewhere, the Sugar business reported revenues which rose by 12%, while revenues for both its Grocery and Ingredients businesses came in flat. For its Agriculture business, revenue rose by 3%, driven by UK feed sales. Group net debt as of 5th January 2013 was £0.9 billion, unusually lower than last financial year end reflecting the strong trading at Primark and the later start to the European sugar campaigns.
As for accompanying outlook comments, management noted that "year to date trading for the group was ahead of our expectations driven by the outstanding performance from Primark, with the rest of the group performing in line. As previously indicated, the full year result for AB Sugar is expected to be lower than last year but we anticipate that this will be more than offset by growth at Primark and some recovery in Grocery." As such, the board expects to make further progress in adjusted operating profit for the full year, with the improvement heavily weighted towards the first half. In all, with the share price up over 20% in the last six months,
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