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Revenues and profits slipped at Associated British Foods (ABF) as the retail and grocery group struggled with food commodity deflation and significant swings in currency markets.

Group sales declined 1% to £12.8bn and adjusted operating profits were 6% lower at £1.1bn in the year ended 12 September. Currency headwinds cost ABF £31m in the period as the euro and emerging market currencies weakened against the US dollar and sterling. However, at constant currency rates, revenues would have been 2% higher and profits just 4% lower than a year ago.

The profits performance was 5% better than analyst consensus as sugar came in better than feared. Although sugar profits plunged 77% to £43m it was better than the break-even predicted. It is the third year of significant profit decline for AB Sugar as a consequence of falling EU and world sugar prices. ABF added that EU prices were starting to stabilise and the group had cut operating costs significantly.

CEO George Weston said: “We delivered a strong operational performance despite the challenges of food commodity deflation and big movements in exchange rates. The group continues to generate strong cash flows and to reduce net debt. While marginally down, our earnings per share result underlines the group’s strength.”

The grocery, agriculture, ingredients and retail, which includes Primark, all increased their profits in the year.

Morning update

Kerry Group (KYGA) said it was confident of hitting its full-year earnings growth target of between 6% and 9% this morning as it announced volumes and revenue had climbed in the first nine months. Business volumes on a group wide basis increased by 3.2% as the taste and nutrition division delivered good growth in American markets and an improved performance in the EMEA region. Consumer foods also managed to increase volumes by 2.6% in the period to 30 September. The rises pushed up reported revenues by 4.3% in the period, despite a pricing decline of 2.8% and a background of approximately 6% lower raw material costs.

“Despite improving global economic conditions, consumer demand in developed markets remains weak,” Kerry said. “Developing markets continue to be impacted by geopolitical issues and significant currency fluctuations. Kerry maintained a solid business performance against this challenging market environment in the three month period to 30 September 2015.”

Imperial Tobacco (IMT) has increased adjusted operating profits 3.2% to £2.9bn despite revenues falling 2.6% to £6.3bn thanks to currency fluctuations. On a constant basis sales were up 4.3%. The performance was driven by a 7% rise in underlying volumes, a 12% increase in net revenue and 6.6% growth of market share for the group’s growth brands (Davidoff, Gauloises Blondes, JPS, West, Fine, News, USA Gold, Bastos, Lambert & Butler and Parker & Simpson). CEO Alison Cooper said: “This was another successful year for Imperial in which we further strengthened the business and improved our quality of growth. We generated excellent results from our growth brands, outperforming the market with volume and share growth.”

As the stock markets opened this morning, ABF fell another (see below) 1.7% to 3,377p, Kerry fell 1.1% to €72.13 and Imperial Tobacco was up 1.7% to 3,523p.

Yesterday in the City

Marks & Spencer (MKS) was one of the big FTSE 100 retail movers on a relatively quiet day for the sector. The high street bellwether finished the day 1.4% higher at 520p – a month-long high – despite a string of fairly negative stories in the weekend papers ahead of Wednesday interims. The City’s expectations have been lowered with another weak sales performance from the clothing arm widely forecast.

Consumer goods giant Unilever (ULVR) slipped into the red with the stock down 0.6% to 2,875p following the group becoming the latest living wage accredited business in the FTSE 100. Unilever has committed to paying all 7,500 of its UK staff the new rate, including regular contractors, by the end of 2016.

After a week of steady rises Associated British Foods (ABF) fell back yesterday by 0.8% to 3,427.2p ahead of this morning’s full-year results. Investor confidence has pushed the share price up to record highs thanks to optimism about the roll-out of Primark into the US and the worst of its sugar woes now behind it. However, the second half is predicted by analysts to have been weak with sales on a constant currency basis up just 1%.

Risers yesterday included Crawshaw Group (CRAW), up 4.6% to 85.8p, Premier Foods (PFD), up 3.7% to 35.3p, and Glanbia (GLB), up 2.4% to €18.