Associated British Foods (ABF) has reported a 3% increase in its group revenues for the 40 weeks ended 18 June, 2016 in comparison to the same period last year at constant currency terms. The increase is just 1% more at actual exchange rates, the British food processing and retailing company revealed in its trading update released on Thursday (7 July).
The London-based company also disclosed that this reflected a 4% growth in the third quarter at constant currency terms and a 7% growth at actual exchange rates. It said its third quarter performance was better than expected with an improvement in its sugar vertical and the completion of its minority interest buyout in South Africa's sugar producer Illovo on 28 June.
While its ingredients, retail, grocery and sugar businesses performed better in the third quarter, the revenues from its agriculture business, AB Agri, declined. ABF attributed this to low commodity prices and lower volumes in UK feed.
As for its fast fashion chain Primark, ABF said sales in the year to date period were 7% ahead of last year at constant currency driven by increased retail selling space. It added that its operating profit margin in the third quarter for Primark stood at 11.9%, in line with that of the first half.
The company said it has a strong balance sheet and is optimistic of the group's continued growth, particularly with its Primark expansion plans, which it said remain unchanged.
Referring to Brexit, the company said because of the weakened pound the company expects "a bigger translation benefit in the final quarter with no material transactional effect".
It added that because of the weakened sterling, its "outlook for this financial year has improved" and that it no longer expects "a decline in adjusted earnings per share for the group for the full year". However, ABF said the low value of the sterling would have both a positive and negative effects on profit in its next financial year.