DAVY VIEW

Associated British Foods’ (ABF) full-year pre-close trading update points to a better-than-expected performance in Primark through July and August, prompting management to adjust its Retail profit guidance to at least the top end of the £300-350m range. ABF’s operationally diversified structure serves it well in this environment – its non-Retail divisions are expected to deliver “very strong” profit growth year-on-year (yoy), driven by Grocery gains and a material improvement in Sugar. Group cash generation was materially ahead of expectations. Today’s statement is evidence of a sustained recovery at Primark and associated franchise value.