AB Foods profit jumps on sugar and Primark results

LONDON Tue Nov 6, 2012 8:47am GMT

A shopper carries a Primark shopping bag on Oxford Street in central London November 5, 2012. Primark-owner Associated British Foods will post its year-end results on Tuesday. REUTERS/Olivia Harris

A shopper carries a Primark shopping bag on Oxford Street in central London November 5, 2012. Primark-owner Associated British Foods will post its year-end results on Tuesday.

Credit: Reuters/Olivia Harris

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LONDON (Reuters) - Associated British Foods (ABF.L) posted a 17 percent rise in full-year profit on Tuesday after what it termed an "exceptional performance" in its sugar operations and at its Primark discount clothing stores.

Primark grew revenue by 17 percent at constant exchange rates, meeting analyst expectations.

"The fact that they delivered on Primark margins will be well received," said Dirk van Vlaanderen, an analyst from Jefferies. "That's definitely the big bright spot of the business," he added.

Primark's operating profit margin was 10.2 percent, level with its results a year earlier.

Primark has been one of the best performing stores on shopping streets in Britain, Ireland and Spain thanks to its low prices and quick adoption of fashion trends.

The company said it did not expect subsidiary AB Sugar to perform as strongly in the year ahead, as a result of lower EU production, but it would be more than offset by further growth at Primark and some recovery in its grocery business.

"The outlook is realistic. The sugar will be down but if they can hold that Primark margin then I think that should be fine," van Vlaanderen said.

Shares in AB Foods were up 0.4 percent at 0825 GMT to 1,372 pence.

The company reported adjusted pretax profit of 974 million pounds ($1.6 billion) on revenue up 11 percent to 12.3 billion pounds, both ahead of average market expectations.

Adjusted earnings per share of 87.2 pence, up 18 percent, also beat the market view.

($1 = 0.6260 British pounds)

(Reporting by Paul Sandle and Christine Murray; Editing by Mark Potter)

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