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Associated British Foods (ABF) has announced it expects to post a first half fall in revenues in its sugar division and a like-for-like sales drop at Primark, though grocery continues to grow.

The food and retail conglomerate has posted a trading update prior to entering the close period for its interim results for the 24 weeks to 3 March 2018.

It said sales growth will be delivered by all of its businesses divisions constant currency, except for a revenue fall in its sugar business due to low EU sugar prices.

“Significantly lower” EU prices have adversely affecting its UK and Spanish businesses, though this will be partially mitigated by a much larger UK crop and the ongoing benefits from performance improvement projects across the business.

In grocery, revenue in the first half is expected to be ahead of last year at constant currency and, with progress in margin, operating profit will be well ahead driven by Twinings Ovaltine.

Revenues at Twinings Ovaltine are ahead of last year at constant currency with especially strong growth for Ovaltine in its major markets of Switzerland, Germany, South Asia, Nigeria and Brazil. Twinings made good progress in the US and Italy although UK sales were held back by strong competition in green teas and infusions.

Volumes at Allied Bakeries in the UK remained strong with good trading over the Christmas period and some progress has been made in reducing the loss for this financial year. Jordans has achieved good overseas growth, especially in Australia, France, Canada, while in the UK, Ryvita Thins has shown continued growth although sales of crispbread have suffered from strong competition.

In ingredients, revenues in the first half are expected to be ahead of last year at constant currency.

Meanwhile, sales at Primark are expected to be 7% ahead of those reported last year, at constant currency, driven by increased retail selling space and 9% ahead of last year at actual rates.

However, like-for-like sales for the group are expected to show a decline of 1% for the 24 weeks. Sales growth was held back by “unseasonably warm weather” in October with a significant decline in the like-for-like measure in that month. Like-for-like sales for the 16 weeks to 3 March 2018 are expected to deliver growth of 1% and Primark achieved record sales in the week before Christmas.

It said early trading of the new spring/summer range has been encouraging.

Overall, it expects adjusted operating profit to be in line with that for the same period last year, though a lower net financial expense and lower group effective tax rate will lead to progress in adjusted earnings per share.

Second half margin will increase at Primark in the second half, while its full year outlook is unchanged with progress expected in both adjusted operating profit and adjusted earnings per share.

ABF shares are up 1.4% to 2,682p on this morning’s update.

Morning update

Hilton Food Group (HFG) and Australian retailer Woolworths have announced an agreement to restructure their Australian meat processing joint venture.

Hilton will begin full operational control of the Bunbury and Truganina plants from 1 July 2018. At the end of a transitional period of two years, Hilton Foods Australia will acquire the relevant plant assets for a book value expected to be AU$85m, for either cash or equity consideration.

This extension to the current supply partnership between the two companies will enable Hilton to continue to service Woolworths with “best in class quality, availability and innovative meat products” across Woolworth’s store network under long term 15-year contracts.

Hillton CEO Robert Watson commented: “We look forward to welcoming the Woolworths employees in Bunbury and Truganina to our team. We have been working closely with Woolworths for five years and we have a deep understanding and respect for each other. Our long term partnership with Woolworths is growing and this is the next phase of an even stronger relationship.

“The long term contract between us displays the mutual trust we have in our partnership and Hilton looks forward to working with the Woolworths team to strengthen further our world class meat offer in Australia.”

Pat McEntee, Woolworths director of meat added: “Woolworths is pleased with the value the current joint venture has created within its meat supply chain and is excited to extend the partnership with Hilton to deliver affordable, innovative and convenient protein choices for its customers.”

On the markets this morning, the FTSE 100 has opened the week on the front foot, rising 0.4% to 7,272.3pts so far.

Along with ABF, other consumer goods groups on the up include Unilever (ULVR), up 1.7% to 3,824.5p and Reckitt Benckiser (RB), up 1.7% to 6,018p. Other risers include McColl’s (MCLS), up 2% to 250p, Hotel Chocolat (HOTC), up 2% to 313.5p and PZ Cussons (PZC), up 1.8% to 291p.

Fallers so far today include Fevertree (FEVR), down 1.1% to 2,503p, Conviviality (CVR), down 0.8% to 287.1p, and Greencore (GNC), down 0.6% to 179.1p.

This week in the City

The main event of note in the diary this week are the Tesco (TSCO) and Booker (BOK) shareholders meetings on Wednesday, where the pair will seek shareholder approval of their £3.7bn merger. Tesco only need a majority of shareholders to approve the deal, but Booker requires 75% approval and a number of shareholders have indicated they are ready to vote against the transaction to secure a higher price.

Tomorrow brings fourth quarter results from Greggs (GRG), while meat ingredients supplier Devro (DVO) issues its full-year results. Travel food specialist SSP Group (SSPG) also has its AGM tomorrow.

Wednesday sees newly listed ready meals supplier Bakkavor (BAKK) issue its maiden annual results as a public company.

On Thursday Nichols (NICL) is scheduled to release its full year results.

In the US, Koninklijke Ahold Delhaize issues its fourth quarter numbers on Wednesday. Beiersdorf and AB InBev (ABI) are scheduled to release their full year results on Thursday.

In wider economic updates, the BRC Shop Price Index is due to be released on Wednesday and GFK’s Consumer Confidence figures are scheduled for release on the same day.