AB Foods says sterling collapse after Brexit to boost earnings

Associated British Foods said the “significantly” weaker pound after last week's Brexit vote had improved the outlook for the current financial year and it no longer expect a decline in adjusted earnings per share.

“In our next financial year, these rates would have both positive and negative effects on profit. There would be an adverse transactional effect on the profit margin on Primark's UK sales, currently half of its turnover, a favourable transactional effect on British Sugar's margins and a translation benefit on group profits earned outside the UK, which last year were some 50% of the total,” the company said in a trading statement for the 40 weeks to 18 June.

“The UK referendum decision to leave the EU has created uncertainty in the business environment and financial markets,” ABF said, although it added that it had “very little cross border trade between the UK and other EU states.

Group revenue for the period was 3% ahead of the same period last year at constant currency and 1% ahead at actual exchange rates, reflecting stronger growth in the third quarter of 4% at constant currency and 7% at actual exchange rates.

“The underlying operating performance of the group during the third quarter was ahead of our expectation, with an improvement in our sugar business, and on 28 June we completed the buyout of the minority interests in Illovo.” ABF said.