Associated British Foods plc Reveals Profits Ahead Of Expectations

Associated British Foods plc (LON: ABF) says sales at Primark soar 22%.

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The shares of Associated British Foods (LSE: ABF) dropped 41p to 1,810p during early trade this morning despite the conglomerate revealing its adjusted second-half operating profit would be ahead of City expectations.

The FTSE 100 member said its results for the 52 weeks to 14 September had been bolstered by a “strong finish” from the group’s Primark retail chain. The group also confirmed underlying earnings for the full year would show “good progress“.

ABF stated its Primark division had enjoyed a 22% turnover advance during the year, and claimed the performance had been supported by a 5% like-for-like sales uplift and better-than-expected margins following lower markdowns during the summer.

The group also announced it would increase Primark’s selling space from 9 million to 10 million square feet during the next twelve months.

Elsewhere in today’s statement, the blue chip mentioned profits from its sugar-refining operation would be in line with expectations, while agriculture profits would be “substantially” ahead of last year. In addition, the group’s grocery profits would be up on last year while ingredient profits would be unchanged.

Prior to today, City experts had been expecting ABF’s results in November to show full-year earnings up 11% to 96.4p per share and the dividend up 10% to 31.3p per share.

Following this morning’s share-price reaction, ABF’s shares may trade on a possible P/E of 19 and yield a potential 1.7%.

Of course, whether that valuation, today’s statement and the general outlook for cheap clothing and sugar refining all combine to make ABF a ‘buy’ right now is something only you can decide.

But if you currently own ABF shares and are looking for another high-quality growth opportunity, the Fool’s smartest analysts have named one company they believe will bring you superior capital gains…

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> Maynard does not own any share mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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