Results round-up

Boosted by the weak pound, Associated British Foods improved its performance in the third quarter, with particularly strong trading at its Primark clothing retail arm that has slightly lifted the full year expectations.

Primark sales grew 21% in the for the 40 weeks to 24 June and 15% at constant currency rates versus the 22% at actual rates and 12% constant in the first half of the year.

This helped boost group sales to 20% at actual rates and 13% at constant currency for the third quarter, and to 20% actual and 10% constant for the 40 weeks of the year to date.

While the collapse of sterling since the Brexit referendum in June last year has boosted numbers substantially, AB Foods noted that at current exchange rates the translation benefit will be "significantly less in the last quarter" of its financial year.

Sales at Primark have been driven by 1.3m more retail selling space in the year to date and growth in like-for-like sales, with a 13% increase in average retail selling space to date.

Retail sales in the quarter were particularly strong in the lead up to Easter, benefiting from comparison with results last year that were affected by poor weather and an earlier Easter holiday.

Against a UK backdrop where other clothing retailers are struggling, Primark performed "particularly well" with year to date sales up 9% on last year and a growing share taken of the total clothing market.

Management also said margins are now likely to stabilise in the second half, rowing back on their previous warning that the operating profit margins decline of 1.7 percentage points in the first half due to the strength of the US dollar on input costs would worsen as maturing currency hedges would be at less advantageous rates.

"However, with the benefit of improved input margin mitigation and lower markdowns, we now expect the full year margin and the rate of decline to be in line with the first half."

As of 24 June, 339 stores were trading from 13.6m sq ft of retail selling space, with 10 new stores opened in the third quarter, including two each in the UK, the US, Spain and the Netherlands; and one each in Belgium and Italy.

"Early trading from these new stores, particularly those in Florence and the US, has been good," the company said, expect to add a further 0.2m sq ft of newspace by the end of the financial year, with four stores in the UK and a fourth Italian store.

Elsewhere in the business, grocery achieved further revenue growth from Twinings Ovaltine and George Weston Foods in Australia, though the "very competitive" bread market has had a negative impact on grocery margins.

AB Sugar revenue growth for remained strong in the quarter, still benefiting from higher prices and increased production from Illovo in Africa and the majority of sales contracts in the EU providing protection from the decline in world sugar prices.

UK sugar production for the 2016/17 year was 900,000 tonnes with a smaller contracted growing area than last year and lower beet yields, while the post-quota environment that begins in the autumn has seen the contracted area for the 2017/18 season increased by a third.

China's record beet crop was processed this year and the new season crop is "progressing well" with prices stable and China now adding additional duties on sugar imports.

Illovo expects to produce 1.7m tonnes of sugar this year compared with 1.4m tonnes produced in the comparable months last year, with a good quality crop this season after last year's drought.

Agriculture revenue growth in the quarter was slightly up on the first half but margin remains under some pressure in UK and China Feeds.

Ingredients profit growth remains strong driven by yeast and bakery ingredients and good performances from Abitec in the US and Enzymes, while an enzymes plant expansion will increase fermentation capacity by over 40%.

Long-term infrastructure investor 3i Infrastructure reported total portfolio income of £20.8m in the three months to 30 June on Thursday, with non-income cash of £17.7m also received over the quarter.

The FTSE 250 company said its portfolio was continuing to perform in line with expectations.

It claimed to have maintained an “efficient” balance sheet, with ongoing liquidity available through its revolving credit facility.

At 30 June, the company held £47.2m in cash and the RCF was £151.1m drawn, including £31.1m for letters of credit.

The undrawn RCF balance was £348.9m, including a £200m temporary additional facility.

3i Infrastructure would pay a final dividend for 2017 of 3.775p per share on 10 July.

"The board is pleased with the performance over the period, in particular with the strong level of income from the portfolio," said chairman Richard Laing.

"We are on track to deliver our FY18 target dividend of 7.85p per share."

The portfolio income - that is, dividends, interest receivable and any fees received from portfolio assets - of £20.8m compared to £13.1m in the same period last year.

Non-income cash received of £17.7m increased from £7.6m year-on-year.

In total, portfolio income and non-income cash to support the dividend was £38.5m, compared to £30.9m received in the previous quarter to 31 March.

"The team has been working actively on the company's newer acquisitions, including reviewing potential follow on investments, and on seeking new investments in the company's target markets of economic infrastructure and greenfield projects," commented Phil White, managing partner and head of infrastructure at the company’s adviser 3i Investments.