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Trading statements

ABF expects excellent H1 progress

27 February 2017 07:23

Associated British Foods expects first half adjusted operating profit and adjusted earnings per share to show excellent progress.

The trading outlook for the group for the full year is unchanged with progress expected in adjusted operating profit and adjusted earnings per share.

The group expects a stronger cash flow, before acquisitions and disposals, in the first half of this year compared to last year.

It said:"This will be driven by a higher profit before depreciation and amortisation, and a lower working capital outflow.

"Capital expenditure will be higher, driven by Primark's expansion. "Acquisitions in the year to date amount to £60m and with the benefit of net proceeds of £0.5bn from the sale of the US herbs and spices business and the south China cane sugar operations, we expect a net cash balance of some £200m at the half year."

An update continues: "We continue to expect substantially all of the full year increase in adjusted operating profit to be generated in the first half."

It said this was for the following reasons.

1. The benefit arising from the translation of overseas results in the first half is expected to be some £50m but, with the weakening of sterling in June last year, and at current exchange rates, there will be less translation benefit in the second half. 2. The full effect of sterling weakness against the US dollar on Primark's purchases will result in a greater margin decline in the second half because currency hedges were at more advantageous exchange rates in the first half. 3. Last year's change in Illovo's financial year end has benefited the first half.

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