Results round-up: Associated British Foods, Bonmarche

Profits surged at Associated British Foods in the first half of the year as the sugar business turned a corner and Primark opened 16 new clothes stores across eight countries, lifting management's hopes for the full year.

However, Primark, which contributes roughly half the earnings and three quarters of the value of the group, saw some margin squeeze from the strength of the dollar on its input costs and this is expected to worsen in the second half.

So while further operating profit is expected in the second half it will not be at the same rate as in the first, partly as currency hedges are at a less advantageous exchange rate and partly due to timing effects in some businesses.

Even so, the board's outlook for the full year result has improved in recent months and "good growth" is expected in adjusted operating profit and adjusted earnings per share.

For the 24 weeks to 4 March, the FTSE 100 conglomerate generated revenue to £7.3bn, an increase of 7% compared to the year before, while underlying profit before tax increased 35% to £652m - with statutory PBT mushrooming 92% thanks to the sale of its US herbs and spices and south China cane sugar operations for a profit of £255m.

Adjusted earnings per share grew 30% to 59.7p and an interim dividend of 11.35p per share was declared, a rise of 10% on last year's.

Chief executive George Weston hailed the substantial increase in selling space at Primark, with 16 new stores adding 0.8m sq ft. of selling space across eight countries in 24 weeks, helping to boost revenue 12% on a comparable basis with last year.

Primark's operating profits of £323m were up 3% at actual currency rates but down 2% underlying.

Furthermore, he pointed to a more acceptable rate of return for AB Sugar, reaching a "turning point" as higher sugar prices met further significant savings generated by performance improvements, while group profit growth also benefited from substantial increases from the grocery and ingredients businesses.

The shares rose 3% in early trading on Wednesday, but is still down almost 19% on its 52-week high a year ago.

Bonmarche

Clothing retailer Bonmarche reported a drop in sales on Wednesday amid challenging conditions but said it expects pre-exceptional profit before tax for the year to 1 April 2017 to be slightly above the mid-point of the £5m to £7m range previously announced.

In the 53 weeks to 1 April, store only like-for-like sales fell 4.3%, while total sales were down 0.5%. Online, however, sales were up 2.2% for the year.

In the 14 weeks to 1 April, total sales rose by 2.7% against the corresponding period in 2016, with store LFL sales down 0.5% and online sales up 15.2%.

Chief executive Helen Connolly said: "As anticipated, trading conditions post-Christmas continued to be challenging, but this was accounted for when we issued the revised profit guidance last September, and therefore the final result for the year is in line with our expectations. Store like-for like sales were negative in January but stronger during February and March, and we also saw the resumption of growth in online sales following improvements made to our online offering.

"Whilst we expect the apparel market to remain challenging during the coming financial year, we are actively taking measures to improve our proposition to customers. We remain confident that Bonmarché remains unique in its ability to serve the needs of its target market and that the successful implementation of our plan will allow us to deliver growth in FY18, despite the challenging market."