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Sep 7, 2009
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AB Foods ups earnings view on strong Primark

By
Reuters
Published
Sep 7, 2009

LONDON, Sept 7 (Reuters) - Associated British Foods (ABF.L) nudged up its full-year earnings forecast on Monday 7 September thanks to a strong performance at its Primark discount fashion chain and its sugar business.

Primark

The London-based group, 55-percent-owned by the family of Chief Executive George Weston, said it now expected "some progress" in adjusted earnings for the year ending Sept. 12, compared with its previous forecast for a flat outcome.

Sales at Primark stores open at least a year were set to rise 7 percent, it said in a statement, up from the 5 percent reported in the first half of its financial year.

However, it also said gross profit margins at the 191-store-chain would be lower because of a rise in import costs following a fall in the value of sterling against the dollar.

Primark accounts for nearly a third of group profit and has branched out from Britain to open stores in Ireland, Spain, Portugal, Germany and the Netherlands.

Swedish rival Hennes & Mauritz (HMb.ST) reported a 3 percent drop in underlying sales in July on the same month last year, following a 5 percent decline in June. Europe's biggest fashion retailer Inditex (ITX.MC) posts first-half results on Sept. 16.

AB Foods said there would be a big rise in profits at its sugar and agriculture business as growth in Europe and South Africa more than offset losses in China.

The group, which markets Silver Spoon sugar, Twining tea and Ovaltine drinks, also said revenues and operating profit at its groceries division rose in the second half of its fiscal year.

Analysts currently expect AB Foods to make adjusted earnings per share of 55.3 pence, up from 54.9 pence the year before, according to the average of 19 polled by Reuters Estimates.

AB Foods shares have outperformed the DJ Stoxx European food stocks index .SX3P by 11 percent this year, and the retail stocks index .SXRP by 3 percent. They closed at 812 pence on Friday 4 September, valuing the group at 6.4 billion pounds ($10.5 billion).

($1=.6123 Pound)

(Reporting by Mark Potter; editing by Kate Holton and Simon Jessop)

(([email protected]; +44 20 7542-2943; Reuters Messaging: [email protected])) Keywords: AB FOODS/

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