Plunging pound boosts profits at Associated British Foods

Retailer and food producer says annual earnings per share would be slightly ahead of those a year ago
A Primark shop
ABF expects the falling pound to hit next year's profits on UK sales at Primark

The fall in the pound after the UK referendum has boosted Primark and British Sugar owner Associated British Foods plc (LON:ABF).

ABF said annual earnings per share would be slightly ahead of those a year ago due to better-than-expected second half trading and the further weakening of sterling since the June 23 vote.

However, the group said the falling pound would hit next year's profits on UK sales at Primark, although there would be a positive effect on British Sugar's margins and profits earned outside the UK.

It added that its pension scheme was likely to fall into the red to the tune of about £200mln, compared to last year's small surplus, due to declining UK long-term bond yields in the last quarter.

The company expects full-year sales at Primark to be 9% ahead of last year at constant currency, but like-for-like sales are set to fall 2%, affected by warm weather before Christmas and a cold March and April.

Ireland delivered a strong performance throughout the year, Spain, France and Austria traded well and the Netherlands and Germany improved, resulting in a currency benefit.

ABF, which owns brands such as Ovaltine and Kingsmill, forecasted grocery revenues marginally ahead of a year ago.

Underlying revenue and adjusted operating profit for AB Sugar for the full year, at both actual and constant currency, would be ahead of last year.

The group announced the sale of its southern China cane sugar business to a consortium led by Chinese regional producer Nanning Sugar.

But operating profits in the the company's farming business AB Agri would be just below last year's.

Food ingredients' revenues are expected to be ahead of last year and operating profit will again be substantially ahead with a further improvement in margin.

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