Penneys' owner AB Foods maintains year guidanceMonday 24 February 2014 08.03
Associated British Foods has maintained its full year earnings expectations as a strong first half performance from its Primark discount fashion chain offset more weakness in its sugar business.
The firm said it continued to expect adjusted earnings per share for the 2013-14 year to be similar to the 98.9 pence made in 2012-13.
AB Foods said underlying operating profit for its first half to March 1 was expected to be in line with last year.
But it cautioned that sterling was continuing to strengthen against its major trading currencies and this would have a more significant negative effect on the translation of overseas results into sterling in the second half.
The firm said Primark's first half sales were expected to be 13% ahead of last year on a constant currency basis, driven by an increase in space and a 4% rise in sales at stores open over a year.
Primark trades as Penneys in Ireland.
Primark's operating profit margin was forecast to be higher than in the same period last year, benefiting from warehouse and distribution efficiencies and lower freight rates.
The fashion chain has been the standout performer in the clothing sector with its low prices and quick adoption of fashion trends pulling in cost-conscious customers.
Revenue and profit from the group's sugar division in the first half will be substantially lower.
AB Foods has previously guided that lower sugar prices, as the market adjusts ahead of EU regime reform in 2017, will result in a substantial reduction in profit from its sugar businesses this year.
The group has also previously stated that it expects Primark's profit will be well ahead of the previous year.
ABF forecast revenue in its grocery business, which includes Silver Spoon sugar, Twinings tea and Ryvita, would be ahead of last year at constant currency, with improved margins.
It said revenue and operating profit in agriculture was expected to be similar to last year, while revenue and profit in ingredients would be ahead.
Shares in the group, which are 55% owned by the family of chief executive George Weston, have risen 63% over the last year.