Associated British Foods plc (LON:ABF) releases its pre-close trading update on Monday.
On Monday 25 February, Associated British Foods (LSE: ABF) is set to release its interim pre-close trading update -- but what should investors expect from the results?
Back in mid-January, in its third-quarter interim management statement the company revealed a 10% rise in group revenue against the same period the previous year, with sugar and retail performing particularly well with 12% and 25% increases respectively.
Primark is undoubtedly the jewel in ABF's crown, with management noting good seasonal trading and a "substantial increase in retail selling space and superior sales densities in the larger new stores". The firm looks set to capitalise on its success with its business strategies, with a larger number of products placed in stores and more new shop openings, including in Spain where it opened six new stores in the third quarter.
Today's news that the eurozone economy is set to shrink by 0.3% in the first quarter of 2013, which sent the FTSE 100 tumbling 105 points to 6,290 by midday, actually serves to benefit Primark -- it has prospered over the last five turbulent years, helping ABF to triple its share price from a low of 613p in 2009
And with France's economy currently looking bleak, the company might be able to capitalise with its first Primark store in the country set to launch by September, with up to a dozen stores potentially opening across the next two years.
While Primark goes from strength to strength, the sugar side of things aren't expected to perform as well. Its AB Sugar business is expected to show lower full-year results as a consequence of the lower sugar production, higher sugar prices and a weaker euro. There is also uncertainty hanging over its Zambia Sugar operations, with ABF having to forcibly deny allegations that it is illegally or immorally avoiding paying millions of pounds worth of tax in the African country.
These two divisions aside, I'll also be keenly awaiting news on ABF's agriculture, grocery and ingredients operations, in order to see how they fare and contribute to the company.
ABF was one of the FTSE 100's best performers last year, and has begun 2013 very strongly. A forecast yield of 1.7% as well the company's aforementioned three-fold increase in share price over the last five years place Associated British Foods as a growth share favourite.
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> Sam does not own shares in Associated British Foods.
