ABF brands

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Associated British Foods has raised its profit forecasts for the year as the grocery and ingredients divisions benefitted from price rises.

The group reported a 13% increase in grocery revenues to £1.1bn in the third quarter to 27 May 2023, while ingredients sales rose 10% to £547m.

The sugar division saw a 51% year-on-year jump in revenues over the 12-week period to £665m as trading continued to be strong across key African markets.

Agriculture increased 4% to £458m to help the total food revenues at the group rise 18% to £2.7bn.

The trading update also showed Primark boosted sales by 13% to £2bn (7% like for like) as the summer ranges performed “well”.

Group revenues for the quarter were up 16% to £4.7bn.

“The group continues to trade well,” the short statement to the London Stock Exchange said. “Based on current trading conditions, we now expect the group’s adjusted operating profit for the full year to be moderately ahead of last year.”

Shares in ABF fell 0.5% to 1,943p as markets opened despite the profits upgrade.

Morning update

Profits have fallen at Cake Box but the fresh cream cakes retailer said current trading was “robust” and the board was “optimistic” about the year ahead.

Revenues in the year ended 31 March rose 5.6% to £34.8m but, despite a 1.4 percentage point increase in margins to 49.4%, EBITDA fell 24.3% to £6.7m and pre-tax profits were 28.6% lower than last year at £5.4m.

The group blamed higher overheads and lower-than-expected sales for the drop as it faced a number of challenges, including input cost inflation, the cost-of-living crisis, a pent -up demand for holidays reducing customer numbers and a prolonger summer heatwave.

However, CEO Sukh Chamdal was bullish about the prospects in the coming year. “The market outlook is improving, our capabilities have been expanded, and the Cake Box brand is stronger than ever,” he said.

“We have the right platform in place for the group’s development to accelerate over the coming year and beyond.”

Franchise sales were up 5.4% on a like-for-like basis over the past 11 weeks.

Sainsbury’s also announced this morning that it is investing £15m to cut the price of cupboard staples such as rice and pasta to help customers manage their budgets. More to follow at thegrocer.co.uk.

The FTSE 100 started the week down 0.5% to 7,421.64pts.

Shares in Cake Box jumped 6.3% to 135p as investors reacted to the optimistic outlook for the group.

Ocado shares dropped 1.7% to 528.4p as the market continued to wait for any statement from the company on speculation of a potential takeover.

Early risers this morning included Science in Sport, up 4.4% to 15.5p, McBride, up 3% to 27.4p, Cranswick, up 1.9% to 3,260p, Nichols, up 1.6% to 1,061.6p, and Bakkavor, up 1.3% to 98.7p.

Finsbury Food and Hilton Food both joined Ocado and ABF as early fallers, down 3.1% to 88.2p and 2.8% to 631p respectively.

This week in the City

NIQ puts out its latest grocery sales figures tomorrow, while the British Retail Consortium releases its monthly shop price index inflation data.

PZ Cussons is also scheduled to release a Q4 trading update, but all eyes will be on the US tomorrow as Walgreen Boots puts out Q3 figures.

Agriculture group Wynnstay is due to issue interims on Wednesday, while General Mills puts out quarterly figures in the US.

Thursday brings a Q1 trading update from discounter B&M and full-year results from Science in Sport and online greetings card group Moonpig, and an update from McCormick in the US.