Tuesday preview: AB Foods to report 'slight' fall in first half EPS

The owner of Primark said in its pre-close trading update in February that it anticipated “some progress” in adjusted operating profit for the group but EPS would be “slightly lower” in the first half.

Revenue in the first half is projected to come in at similar levels to last year at constant currency but lower at actual exchange rates.

The company said world sugar prices remain weak, but a tightening of EU and Chinese stock levels has resulted in a strengthening of prices in those markets.

Earlier this month, the firm announced it was buying the remaining stake of which it didn't already own in Africa's largest sugar company, Illovo Sugar, for £262m.

“Africa is a growth market for sugar, driven by increasing populations and rising incomes,” ABF said in a statement.

Meanwhile, ABF said Ingredients delivered “excellent revenue growth” in the first half with all businesses increasing profit.

The agriculture division is likely to see a decline in revenue, particularly in the UK feed business AB Connect, reflecting lower sugar beet feed volumes and the effects of a mild winter on demand for ruminant feed.

Primark’s sales are guided to rise 7.5% in the first half at constant currency and 4% at actual exchange rates, driven by increased retail selling space.

AB Foods said trading at the budget retailer was weaker in the weeks leading up to and over Christmas due to unseasonably warm weather across northern Europe. However, the group said cumulative like-for-like sales have improved since the January trading update and are expected to be level with last year in the first half.

“Whilst we note the UK retail outlook has been fairly weak in recent months, we would expect Primark's overseas sales to provide support to the business, particularly as the cannibalisation impact from Germany and the Netherlands fades out, ensuring that LFL remains in low SD territory, (UBSe 2% LFL for FY16),” said UBS analyst Sophie Hughes.

UBS expects AB Foods to reiterate its full year guidance that the underlying outlook is unchanged, with expectations for a marginal decline in adjusted earnings per share.

AB Food has said the weakening of sterling, particularly against the euro, will likely ease the effect of currency translation on this year's results, reducing the group’s previous estimate of £25m to £10m.

On the economic front, Germany's ZEW institute is scheduled to release its widely-followed April economic sentiment index for the month of April.

Foreign trade numbers referencing the month of March are also due out from Japan's Ministry of Finance.

Thursday 21 April

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