By Adriano Marchese
Associated British Foods PLC (ABF.LN) said Friday that it expects improved earnings per share in fiscal 2020 but full-year margins at its Primark business to be below the prior year.
The U.K. retailer said its sugar business will benefit materially from the increase in European Union sugar prices and from further cost reductions. It anticipates its grocery business will have another year of strong profit and margin growth, with its Twinings Ovaltine range in particular benefiting from a more efficient tea supply chain.
The company's low-cost fashion chain Primark has a strong pipeline of good quality sites, it said, and that it will continue to expand its selling space in the year, with more stores being added in France and Spain. However, margin on a lease-adjusted basis will be below last year's with the effects of weaker sterling largely offset by cost reductions of goods plus overheads.
The company said it still expect progress in adjusted earnings per share for the group on both a reported and an IFRS 16 adjusted basis--a metric which excludes exceptional costs.
AB Foods said that it has completed all practical preparations for Brexit, and contingency plans are in place in case of disruptions.
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