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Primark Stars for Associated British Foods

Sam Robson
January 17, 2013

LONDON -- Shares in Associated British Foods (LSE: ABF) put on 5.2%, or 81 pence, in early trade this morning to reach 1,637 pence, following the release of its third-quarter interim management statement. I recently put the company onto my watchlist, so let's delve into the numbers:

Covering the 16 weeks to Jan. 5, 2013, Associated British Foods announced that group revenue was 10% up on the same period last year. The company has five different business segments, with the growth breakdown as follows: sugar (+12%), agriculture (+3%), grocery (0%), ingredients (0%) and retail (+25%).

So while there was no drop-off in any of the five areas, trading for agriculture, grocery, and ingredients remain in line with expectations, there were positive growth signs in sugar (albeit with a warning -- more on that later), but retail was the real star of the results with Primark's massive 25% increase in revenues.

Management highlighted a "substantial increase in retail selling space and superior sales densities in the larger new stores" and good Christmas trading, although it ought to be noted that the 25% figure this year is enhanced by the previous period's unseasonably warm autumn (reducing the demand for new, warmer clothes). Nonetheless, Primark is undoubtedly the jewel in ABF's crown, and 14 new stores were opened in Q3 2012: six in Spain, four in the U.K., one each in Germany and the Netherlands, and the company's first two stores in Austria. Another notable event in the period was the opening of a second sto