AB Foods' sugar outlook gets dented by lower EU prices

LONDON, Jan 18 (Reuters): Primark owner Associated British Foods maintained full-year earnings guidance on Thursday, but cautioned revenue and profit at its sugar business would fall by more than previously expected due to lower European Union sugar prices.

The group trades from 350 Primark fashion stores and also owns major owns major sugar, grocery, agriculture and ingredients businesses.

In November AB Foods had cautioned that in sugar, higher volumes and lower costs would only partially mitigate the effect of much lower EU prices.

On Thursday it forecast a sugar revenue and profit reduction greater than previously forecast for the 2017-18 year primarily as a result of significantly lower EU sugar prices, which hit its British and Spanish businesses.

In the 16-weeks to Jan. 6, AB Sugar's revenue fell 12 per cent at constant currency.

However AB Foods said it still expected "progress" in group adjusted operating profit and adjusted earnings in 2017-18 year.

Group revenue for the 16 weeks period rose 4 per cent at constant currency rates and by 3 per cent at actual rates.

At Primark, which accounts for about half of group revenue and profit, sales rose 7 per cent on a constant currency basis, driven by new store openings. In the UK, which contributes about half of Primark's revenue, the retailer reported "strong" like-for-like sales growth and market share gains.

However, Primark's sales growth across mainland Europe was held back by unseasonably warm weather in October. It said trading in the United States had continued to make progress.

Primark's operating margins in the first half were now expected to be close to those in the same period last year.