Assoc.British Foods - Pre Close Period Trading Update
Pre Close Period Trading Update
Trading in the fourth quarter in both our food businesses and Primark exceeded our expectations. Grocery benefited from a continuation of increased retail sales volumes in our key markets of the US,
For the full year we expect a very strong increase in the aggregate adjusted operating profit for our Sugar, Grocery, Agriculture and Ingredients businesses over last year. This will be driven by increases in each division with particularly strong increases in Sugar and Grocery. Adjusted operating profit for Primark on an IFRS16 basis, excluding exceptional charges, is now expected to be at least at the top end of the
Net interest expense and lease interest will be in line with last year, on an IFRS16 pro forma basis, and other financial income will be lower than in 2019 as previously explained. The full year effective tax rate for the group is expected to be in the region of 30% due to the much lower taxable profit in the
We expect adjusted earnings per share to be significantly below last year as a result of the decline in Primark's profit due to the store closures and the ongoing impacts on customer demand caused by COVID-19.
Our expectation is that the year-end net cash balance, before lease liabilities, will now be some
We fully repaid the group's Revolving Credit Facility of
Grocery revenues will be ahead of last year with growth in Twinings,
Twinings made good progress this year with volume growth in black tea and infusions in each of its major markets. Sales of Ovaltine were however held back by the impact of COVID-19 on impulse sales, particularly in
Allied Bakeries revenues declined this year following the termination of our largest private label bread contract earlier in the financial year. However cost reductions and a COVID-19 related uplift in sales resulted in an improved underlying operating result. Following the previously announced loss of the Co-op contract the carrying values of some of our distribution assets have been reviewed resulting in a one-time charge of
Although Westmill and AB Sports Nutrition have seen sales and profit declines due to the reduction in foodservice activity and sports events respectively,
Acetum delivered growth with increased demand for balsamic vinegar in
AB Sugar revenue will be ahead of last year. Adjusted operating profit will be well ahead, driven by the benefit of the strong recovery in EU sugar prices which will more than offset much lower profits at Illovo.
EU sugar prices increased this year with a reduction in stocks following lower EU sugar production in the last two campaigns. Looking ahead, estimates for EU sugar production in the upcoming campaign are lower than this year due to reduced yields following difficult weather conditions and the prevalence of virus yellows disease in the beet. Following a sharp price decline in April there has been some recovery in the world sugar price reflecting higher commodity crude oil prices. Our
The operating performance in
Sugar production at Illovo is expected to be in line with last year at 1.63 million tonnes, but lower than expected with production at the end of the 19/20 season curtailed by the early onset of the rainy season. Illovo is expected to deliver a much reduced profit. Domestic South African market volumes reduced this year by some 10% following the recent introduction of a sugar tax and we expect volumes to continue at these lower levels. The operating profit in
Ingredients revenues and operating profit are now expected to be ahead of last year.
AB Mauri responded quickly to higher demand for yeast and bakery ingredients with increased production capacity. Retail demand for yeast was particularly strong and sales of non-dairy toppings in
Our proposed yeast and bakery ingredients joint venture in
All Primark stores reopened in May, June and July. Since reopening we have traded strongly, attracting customers with our value-for-money offering and a welcoming and safe store environment. Cumulative sales since reopening to the year-end are expected to be
Total customer spend on clothing, footwear and accessories in our markets has been impacted by COVID-19. It has been recovering from a low point in April and the rate accelerated with the reopening of stores.
Since reopening we have seen increasing numbers of transactions driven by footfall. The average basket size was initially significantly higher than last year, reflecting some pent-up demand, and while this outperformance has reduced in recent weeks it remains higher than a year ago. We have continued our policy of offering the best prices, and markdowns for the period since reopening have been low.
Compared to pre-COVID-19, sales performance since reopening has in aggregate been reassuring and encouraging. By store the performance has varied, reflecting the current circumstances of our customers including increased home working, less commuting and much less tourism. Sales at our stores in retail parks are higher than a year ago. Shopping centre and regional high street stores are broadly in line with last year and large destination city centre stores, which are heavily reliant on tourism and commuters, have seen a significant decline in footfall. Our 16 largest destination city centre stores contributed 13% of total sales pre-COVID-19 and 8% of sales after reopening.
We are prioritising the health and wellbeing of everyone in store and have received positive feedback from our customers about the safety measures in place and the welcoming store environment. We are working constantly to optimise the implementation of in-store safety measures and have recently installed additional dividers at the tills in our 250 busiest stores which has enabled more tills to be opened and has reduced queues.
Sales in the US are expected to be 9% lower on a like-for-like basis and are 2% ahead excluding our
At the half year we recognised an exceptional charge of
Current orders being placed are benefiting from recent weakness in the US dollar.
In July Primark announced the rollout of its
The store opening programme planned for the second half of this year has been delayed by restrictions on access to complete the fit-out of our stores. Nevertheless, since our last trading statement a further three stores have been opened: Plaisir and Belle Épine in
The stores added this year are as follows:
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Berlin Gropius Passagen
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Warsaw Galeria Mlocincy
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We closed our small store in Rathfarnham in
In the next financial year, our current plans are to add a net 0.7m sq ft of additional selling space. We expect to open 14 new stores with four in
Business contingency plans
There is uncertainty about the possibility of further public health measures in response to COVID-19 that could restrict our ability to trade. Over the past six months we have developed a flexible set of responses and are ready to deploy these as required.
Our businesses have completed all practical preparations should the
For further enquiries, please contact:
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Tel: 020 7399 6500
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Tel: 020 7399 6500
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Tel: 07968 727 289
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Tel: 07834 336 650
The like-for-like sales measure represents the change in sales at constant currency in our retail stores which have been open for at least one year. It excludes the first year of sales of new stores, the sales of stores closed in the period and one year of sales of stores where there has been a change to the selling space. It is measured against the comparable trading days last year.
Exceptional items are defined as items of income and expenditure which are material and unusual in nature and are considered to be of such significance that they require separate disclosure on the face of an income statement.
Adjusted profit and earnings measures
Adjusted operating profit is stated before amortisation of non-operating intangibles, transaction costs, amortisation of fair value adjustments made to acquired inventory, profits less losses on disposal of non-current assets and exceptional items. Adjusted profit before tax is stated before amortisation of non-operating intangibles, transaction costs, amortisation of fair value adjustments made to acquired inventory, profits less losses on disposal of non-current assets, exceptional items and profits less losses on sale and closure of businesses.
Adjusted earnings and adjusted earnings per share are stated before amortisation of non-operating intangibles, transaction costs, amortisation of fair value adjustments made to acquired inventory, profits less losses on disposal of non-current assets, exceptional items and profits less losses on sale and closure of businesses together with the related tax effect.
Items as defined above which arise in the group's joint ventures and associates are also treated as adjusting items for the purposes of adjusted operating profit and adjusted profit before tax.
Constant currency is derived by translating the prior year results at current year average exchange rates, except for countries where consumer price inflation (CPI) has escalated to extreme levels, in which case actual exchange rates are used. There are currently two countries where the group has operations which are experiencing extreme levels of CPI -
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