AB Foods Beats 1st Half FY2018 Profit Forecast -- Earnings Review
By Maryam Cockar
Associated British Foods PLC (ABF.LN) posted earnings for the fist half of fiscal 2018 on Tuesday. Here's how the results came in:
ADJUSTED PRETAX PROFIT: FTSE 100-listed AB Foods' adjusted pretax profit, before amortization and other costs, was 628 million pounds ($899 million), beating expectations of GBP618 million, according to FactSet and based on one analyst's estimate. Last year, the company reported adjusted pretax profit of GBP624 million.
REVENUE: The food, ingredients and retail group missed revenue expectations. It said revenue for the six months ended March 3 was GBP7.42 billion, compared to the consensus forecast of GBP7.58 billion, according to four analysts polled by FactSet. The year earlier, AB Foods generated revenue of GBP7.30 billion.
WHAT WE WATCHED:
PRIMARK: Revenue for the core clothing retail business Primark rose 7% at a constant currency basis, or 8% at actual rates, to GBP3.48 billion from GBP3.22 billion. However, like-for-like sales were hit by the cold weather in Europe and fell 1.5% in the period. The company said U.K. sales were 8% ahead of last year, driven by a 3% growth in like-for-like sales and an increase in selling space.
MARGINS: Primark's operating margin in the first half was 9.8%, compared with 10% in the year earlier, which AB Foods attributed to an improved strategy of buying products that offset the adverse effect of the U.S. dollar exchange rate on purchases.
AB Foods said it expects Primark's profit growth to accelerate in the second half of the year due to a lower margin driven by better buying and some benefit of the recent weakness of the U.S. dollar.
SUGAR: Revenue from the sugar unit fell 12% on a constant currency basis, or 13% at actual rates, to GBP938 million from GBP1.08 billion. The company said this was expected due to lower EU prices which adversely affected its U.K. and Spanish businesses.
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