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ABF witnesses slowing down of growth

ASSOCIATED British Foods Plc said yesterday that revenues grew 15 percent in the 16 weeks to June 20, marking a slowdown in strong growth in the company's first three quarters.

ABF, which owns the Primark clothing shops and has interests in sugar refining, agriculture and groceries, said Primark's sales in the third quarter were up 21 percent compared with the same period a year ago, partly reflecting increases in selling space with new stores in Germany, Portugal, Spain and England. The company said comparable growth was "excellent," but did not disclose a figure.

The acquisition of Madrid-based sugar producer Azucarera Ebro on April 30 helped drive sugar revenues up 19 percent in the quarter, or 7 percent on a comparable basis.

Agriculture revenue growth slowed to 12 percent in the third quarter, reflecting lower prices for some feeds. Grocery revenues were up 10 percent, compared to a 22 percent gain in the first half driven by price increases.

ABF shares were down 0.8 percent at 759 pence (US$12.20) on the London Stock Exchange.

Graham Jones, analyst at Panmure Gordon & Co, said ABF was positioned for strong growth next year.

"Primark's sales growth has accelerated from an already impressive level in the first half, European Union and African sugar remains strong ... and grocery has recovered from a torrid first half, with Mazola in particular seeing a much better performance," said Jones.

ABF had reported a 31 percent drop in profit in the first half of its fiscal year as higher operating costs offset a strong gain in sales. Net profit for the 24 weeks ending February 28 was 139 million pounds, compared with 202 million pounds in the same period a year earlier. Revenue rose 19 percent to 4.4 billion pounds, while operating costs were up 18 percent to 4.3 billion pounds.


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