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Shareholders in Assoc. British Foods (ABF) are enjoying a welcome sugar rush this morning as markets react very positively to better than expected FY growth (sales, profits, selling space), helping shares extend an October bounce to levels last seen in late September.
A global bond rally reducing financing costs coupled with lower tax and helpful FX moves are helping sugar margins (already up on better global sugar prices), bringing focus back to the ‘ingredients/agriculture’ segment to prove that the ABF story can still be something other than discount fashion and Primark. The latter’s margins are still likely to suffer as a result of a weak GBP/USD rate, but markets are clearly glad that the overall negative effects to date (and forecast) are no more than the company had previously guided to.
Investors appear to believe that 2016 will indeed prove a turning point and that the company’s engagement with the UK government over Brexit negotiations can bear fruit with better agreements for trade.
Mike van Dulken, Head of Research, 8 Nov
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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