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(Alliance News) - Associated British Foods said Monday that fourth-quarter trading in both its food businesses and low-cost fashion store chain Primark has beaten expectations.
Increased demand for yeast and bakery ingredients, particularly across the Americas and China, delivered higher sales for the Ingredients business, and the Sugar unit, as expected, will deliver a "much improved" profit year-on-year.
"All Primark stores reopened during May, June and July and trading during the fourth quarter has been strong. In the latest four-week UK market data for sales in all channels, Primark achieved our highest ever value and volume shares for this time of year," AB Foods added.
Adjusted operating profit for Primark, excluding exceptional charges, is now expected to be "at least at the top end" of the GBP300 million to GBP350 million range previously advised for the financial year ending September 12, compared to GBP913 million the year before.
AB Foods shares were up 5.6% early Monday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.6% at 5,830.81
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Hang Seng: down 0.6% at 24,541.43
Nikkei 225: closed down 0.5% at 23,089.95
DJIA: closed down 159.42 points, 0.6%, at 28,133.31
S&P 500: closed down 0.8% at 3,426.96
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GBP: down at USD1.3205 (USD1.3230)
EUR: up at USD1.1828 (USD1.1809)
Gold: up at USD1,931.81 per ounce (USD1,919.60)
Oil (Brent): down at USD42.00 a barrel (USD42.74)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
US Labor Day holiday. Financial markets closed.
0830 BST UK Halifax house price index
1100 BST Ireland industrial production and turnover
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A "treacherous betrayal" enacted by a group of Tory "charlatans" is how various political figures have described the UK government's reported plan to rip-up the Brexit Withdrawal Agreement ahead of the next round of trade talks. In reports a government spokesman appeared to confirm, the Financial Times said Boris Johnson was planning new legislation that would override key parts of the agreement – the treaty that sealed Britain's exit from the EU in January – in a move that could risk collapsing the UK-EU trade talks. The prime minister is expected to say on Monday that collapsing the trade talks, should there be no agreement by the October 15 European Council, would still be a "good outcome for the UK". The pre-briefed words from Johnson arrived as the FT reported sections of the Internal Market Bill, due to be published on Wednesday, are expected to "eliminate" the legal force of the Withdrawal Agreement in areas including state aid and Northern Ireland customs.
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Industrial production in German rose 1.2% in July from June, slowing from a 9.3% month-on-month rise in June. However, production remained down 10% on a year before.
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BROKER RATING CHANGES
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UBS CUTS ANTOFAGASTA TO 'SELL' ('NEUTRAL') - TARGET 900 PENCE
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GOLDMAN SACHS CUTS INFORMA TO 'NEUTRAL' ('BUY') - TARGET 429 (503) PENCE
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JPMORGAN CUTS PHOENIX GROUP TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 799 (786) PENCE
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COMPANIES - FTSE 100
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National Grid said the UK energy regulator's draft determinations are "unacceptable, not being in the interests of consumers, and not reflecting the views of our stakeholders". The power grid operator said it submitted its responses to Ofgem's RIIO-2 draft determinations on Friday. National Grid said it complained about "the combination of the proposed low base level of total expenditure, the uncertainty around the approval process for additional [total expenditure] and the low allowed baseline return", and it said it proposed remedies.
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US regulators are examining claims from a whistleblower that Rio Tinto was aware of problems in Mongolia's Gobi Desert months before it revealed the project was running late and over budget, the Financial Times reported on Sunday. The newspaper said the Securities & Exchange Commission is probing the allegations made by Richard Bowley, Rio's employee, who worked on the USD6.8 billion project between 2017 and 2019. Bowley - a former head of strategic projects in Mongolia - said he first alerted Rio executives to issues at Oyu Tolgoi mine in Mongolia in February 2018, according to documents filed with a UK Employment Tribunal earlier this year. Bowley left Rio in March 2019, with the miner, four months later, revealing the project was between USD1.2 billion and USD1.9 billion over budget and running 16 to 30 months behind schedule.
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COMPANIES - FTSE 250
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Future said it expects results for its soon-to-end financial year to be "materially ahead" of market expectations. The magazine publisher said it continues to benefit from a shift to digital media, with organic unique visitors in the UK and US in August up 25% and 40% respectively compared to the prior year. "Combined with a better-than-expected performance of TI Media in the second half, full-year adjusted operating profit is now expected to be materially ahead of current market expectations. In addition, as a result of continued strong cash conversion the business is de-levering quickly," Future added. The firm noted that the current consensus range for adjusted operating profit for the year ending September 30 is GBP78.2 million to GBP83.2 million. This compares to GBP52.2 million in the 2019 financial year. Future added that it now expects cost synergies from the TI Media merger of GBP20 million per year by the end of 2021 financial year, ahead of earlier forecasts of GBP15 million.
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Dechra Pharmaceuticals posted full-year profit growth and said recent trading has been "encouraging". Revenue for the year ended June 30 rose 6.9% to GBP515.1 million from GBP481.8 million the year before, with pretax profit increasing 47% to GBP40.9 million from GBP27.8 million. Dechra proposed a final dividend of 24.00 pence per share, up from 22.10p a year ago. When added to the interim payout of 10.29p, the total dividend for the recently ended financial year was 34.29p, up 8.5% from 31.60p the year before. Turning to the year ahead, Dechra said trading in the first few weeks of the new financial year has been "encouraging".
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COMPANIES - GLOBAL
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Private equity firms Apollo Global Management and rival Lone Star Funds are preparing takeover offers for UK supermarket chain Asda, the Telegraph reported. Bids for the grocer, which is valued at GBP6.5 billion, are due on Monday, according to the newspaper. Asda is owned by US supermarket operator Walmart. According to the Telegraph, there is speculation of potential interest from a third bidder such as the owners of EG Group, the Issa brothers. Walmart is expected to maintain a minority stake in Asda if a private equity sale proceeds, the newspaper added. The process to sell Asda was launched after merger plans with rival J Sainsbury were blocked by UK regulators in 2019.
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Monday's Shareholder Meetings
International Consolidated Airlines Group
Spitfire Oil - GM re dissolving company
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By Tom Waite; thomaslwaite@alliancenews.com
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