REG - Assoc.British Foods - Trading Update

Associated British FoodsAnnouncement

23/01/2024 07:00

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RNS Number : 5187A  Associated British Foods PLC  23 January 2024

23 January 2024

Trading Update

Associated British Foods plc today issues its trading update for the 16 weeks
to 6 January 2024 summarising the significant trading developments since the
last market update.

Group revenue

The following table sets out revenues by business segment for the period.

 

              First Quarter / 16 weeks to 6 Jan  Change at actual  Change at constant

              £m                                 currency          currency
 Grocery      1,414                              +1.8%             +5.4%
 Ingredients  698                                -2.8%             +0.9%
 Agriculture  572                                -12.1%            -10.8%
 Sugar        825                                +3.8%             +13.0%
 Retail       3,376                              +7.3%             +7.9%
 Group        6,885                              +2.8%             +5.4%

 

References to growth in the following commentary are based on constant
currency except where stated.

Trading performance

Our Grocery business performed well. Our US-focused brands, including our
Stratas joint venture in edible oils, continued their strong performances from
last year. Within international brands, Twinings traded well across its key
markets. Ovaltine had a strong performance in Western Europe but was weaker
overall as it continued to face challenges in Asia.

In Ingredients, our yeast and bakery ingredients business AB Mauri also
maintained the strong performance of last year with further growth in sales
and profit. As expected, parts of ABF Ingredients were softer due to continued
customer destocking. In Agriculture, sales were weaker although certain of the
compound feed markets are beginning to show signs of recovery.

In Sugar, processing of the UK sugar beet crop is under way and indications to
date are that sugar production will still be significantly above last year
despite the recent weather. This should bring production more broadly into
line with historical production levels. Vivergo had a mixed period of trading
but was overall much better than last year. Illovo, our sugar business in
southern Africa, also had a mixed period with a combination of production and
currency challenges.

Primark trading was good overall with sales up 7.9% for the period which was
marked by a slow start given the unseasonal warm weather, and strong Christmas
trading. Like-for-like sales grew by 2.1% driven by higher average selling
prices.

Our product offer performed well in the period. Sales of womenswear and
menswear were strong particularly in performance wear, leisure and tailored
clothing and in our Rita Ora collection. Sales of our Christmas ranges were
also strong and sold through well. At the start of the period sales of many of
our cold weather categories were initially slower but have much improved with
the recent cold temperatures.

In the UK, total sales in the period rose by 4.5% with like-for-like sales up
by 3.8%. Following the period's early warm weather challenges, sales grew
strongly in the run-up to Christmas. Primark's market share(1) reached a new
record at 7.1% for the 12 weeks to 10 December, up 0.1 percentage point from
last year.

In Europe excluding the UK, total sales in the period rose by 8.1%, with
like-for-like sales up by 1.3%. Performance was mixed with some countries
trading well and other countries impacted by a combination of strong
comparatives in the same period last year and local economic conditions. Sales
in the US grew by 45% in the period driven by new store openings.

We exited the period with stock levels in a good position.  We continue to
monitor the situation in the Red Sea but at this stage we do not expect any
significant disruption to our supply chain.

Contribution from our new store opening programme remains very strong as our
store expansion programme continues with eight stores opened in the period:
three in France, three in the US, one in Spain, and one in Poland.

Overall

The Group continues to trade well. We continue to look forward to a year of
meaningful progress in both profitability and cash generation, with the
profitability improvement being driven by a recovery in Primark margin, a
marked improvement in British Sugar profitability, and by reduced losses at
Vivergo.

At this early stage in the year we now feel more confident in the continued
strong performance of both our US-focused brands in Grocery and of AB Mauri in
Ingredients.

We also feel more confident in the delivery of the Primark adjusted operating
margin in this financial year, driven by a further improvement in product
gross margin. This should insulate us well against potential additional costs
of supply due to the disruption in the Red Sea should they arise.

1.   Kantar, Primark market share of the total UK clothing, footwear and
accessories market including online by value, 12-week data to 10 December 2023

 

 

For further information please contact:

 

Associated British Foods:

+44 20 7399 6545

Eoin Tonge, Finance Director

Chris Barrie, Corporate Affairs Director

 

Citigate Dewe Rogerson:

+44 20 7638 9571

Jos Bieneman +44 7834 336 650

Angharad Couch +44 7507 643 004

 

An investor and analyst call will be held at 08:30 today, Tuesday 23 January
2024. All participants must pre-register to join this conference using the
Participant Registration link below. Once registered, an email will be sent
with your unique Registrant ID.  Please register via participant
registration link
(https://register.vevent.com/register/BIafbdca7dfc41436cafdf1be7b022ad18)

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