Basically back where it started the year, can Associated British Foods (LON:ABF) continue to climb in the right direction following next Thursday’s Q3 statement?
So far the Primark-owner has basically moved laterally in 2018. Opening at £28.18, the stock had briefly slipped below £24 by late March, its worst price in 13 months. From that low ABF has since recovered, hitting a 5 month peak of £28.41 on June 25th. Associated British Foods PLC now sits at a current trading price of £27.64 (Spreadex, 28/06/2018).
The company’s full year results back in mid-April helped out in that springtime recovery, the stock shooting up nearly 7% as investors ignored the issues highlighted by the update. As ever Primark was the headline focus, with the main takeaway being a 3% rise in like-for-like sales at the bargain behemoth. That sounds good; however, it’s a huge drop off from the 10% surge seen the year previous. ABF blamed the weather for the decline, the firm pointing the finger at unseasonably warm temperatures in October harming its winter range, and March’s ‘Beast from the East’ keeping shoppers from the high street.
Still, Primark’s overall sales still rose 8%, pushing the company towards a 2% increase in group revenue to £7.4 billion despite an expected 13% plunge in sugar sales. Adjusted pre-tax profit, meanwhile, was up 1% to £628 million, with a 3% jump in the interim dividend to 11.7p per share.
As for next week’s update, investors are going to want to see Primark’s like-for-like sales pick up the pace once again, given that ABF doesn’t have the weather as an excuse this quarter. They’ll also be keeping an eye on the sugar division, with the hopes that things won’t have gone further south.
Associated British Foods PLC has a consensus rating of ‘Buy’ alongside an average target price of £32.30.
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