Oil prices see slight recovery following bleak Monday, as coronavirus fears continue
Oil prices have seen another spike on Tuesday morning, following slumps of almost 4% recorded on Monday.
Concerns about the coronavirus are continuing to spread – and a few days back I was here writing about how it looked like the epidemic was under control.
This turned out to be a call made too soon however – worries now that the coronavirus has spread to Italy has raised concern levels not just for investors and traders, but also global governments.
Global equities still seem to be recovering from the slump that was seen on Monday – the Dow Jones plunged more than 900 points, as well as slips to oil derivatives.
The demand for oil has been volatile since the outbreak of the coronavirus, and any gains in price have been offset by falling supply measures.
Last week, OPEC+ announced that they would be monitoring the supply of oil very carefully in order to keep oil derivative prices steady at a time where the global economy is in shock.
There is no doubt that the coronavirus is still very much at large – countries and governments are trying to put together an action plan to stop any further spread, however this is seeming to be a bigger challenge than what was initially expected.
Reports in China have suggested that the virus has now affected more than 80,000 people – a significant number considering that this is ten times more than the SARS coronavirus outbreak in 2002/2003.
However, Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman said that OPEC+ should not be complacent about the coronavirus.
Following the slump that was faced on Monday, oil prices are still trying to recover. The outbreak of the coronavirus still continues to dominate news headlines, as the U.S. Centers for Disease Control and Prevention (CDC) warned that “more cases are likely to be identified in the coming days” in the United States, although it said that the “immediate health risk” is “low.”
OPEC+ are scheduled to meet at the end of next week, however continued tensions between Russia and Saudi Arabia may mean that negations could stutter.
The price of WTI Crude is currently $51.40, whilst Brent Crude trades at $55.78.
Meggitt post bullish set of annual results, however shares stay in red
Meggitt PLC (LON:MGGT) have reported an impressive set of annual results on Tuesday, however shares have remained in red.
Shares in Meggitt PLC trade at 581p (-2.15%). 25/2/20 10:01BST.
The annual results were impressive reading for the FTSE 100 lister, as organic revenue beat raised guidance.
Across 2019, the aerospace parts firm said that revenue totaled £2.28 billion in 2019. This sees a 9.6% jump from £2.08 billion in 2018 – certainly an impressive statistic for shareholders to take from the update.
Notably, this surge in revenue also meant that pretax profit rose 33% to £286.7 million from £216.1 million.
Orders also rose 10% year on year in 2019, totaling £2.47 billion. Notably performances came from the civil aerospace, defense and energy sectors – all which saw a 8%, 11% and 10% rise in sales respectively.
The firm continued the good news, and declared an interim dividend of 17.50p per share, which sees a 5.1% spike from 16.65p in 2018.
Meggitt did warn shareholders that 2020 could be a tough year for the firm, following production supply issues with Boeing (NYSE:BA) and issues ongoing with the outbreak of the coronavirus.
The firm forecasted by saying that it expects 2020 revenue to lie within the 2% to 4% ball park, and that 2020 underlying operating margin will improve by 30 to 50 basis points.
Tony Wood, Chief Executive, commented:
“Over the last three years, as a result of the successful execution of our strategy, the Group has become a more focused, higher quality and more resilient business, reflected in the delivery of strong levels of organic growth and cash generation.
We delivered another strong set of results in 2019, with organic revenue growth of 8%, ahead of our raised guidance, and good performance across all end markets, particularly Defence.
Our performance was underpinned by growing end-markets and strong execution across our teams during the first full year of our new customer‑aligned organisation. We delivered good progress on our strategic initiatives helping offset the investment made at our fast growing advanced engine composites sites and headwinds caused by adverse mix, supply and trading environment conditions and the grounding of the Boeing 737 MAX, and enabling us to deliver an increase in underlying operating profit of 10% to £403m.
2020 will mark another important year for the Group including the phased transfer into our new, state-of-the-art manufacturing campus at Ansty Park, UK. With a clear strategy, good cash generation and our increasing market share across our growing installed base of 73,000 aircraft, we are well positioned to sustain growth ahead of the market over the medium term.
Reflecting our continuing confidence in the prospects for the Group, the proposed final dividend is 11.95p giving a full year dividend of 17.50p, an increase of 5% and we expect 2020 to be a year of further progress and profitable growth.”
Meggitt also announce Directorate change
In a separate update today, the firm also announced that Sir Nigel Rudd who is Chairman would be stepping down as Chairman and Director of the Company to spend more time on his business and other interests. Meggitt said that Rudd would be staying in his role until a suitable replacement is found, but will not seek re-election at the 2021 AGM. Rudd commented: “It has been a privilege and a pleasure to serve as the Chairman of Meggitt. Since 2015, we have focused on establishing Meggitt as a truly world-class, innovative, global aerospace, defence and selected energy business and I am very proud that in 2019 the company returned to the FTSE 100 index. It has been a pleasure to work alongside the Board and senior management team during this time to determine and deliver the Group’s vision and strategy, and lay the groundwork for future growth. I will work to ensure a seamless transition to my successor.Meggitt win big with DLA
In November, the firm announced that they had won a big contract with the Defense Logistics Agency in Philadeplphia. Megitt will supply fuel bladders to the F/A-18 Super Hornet, V-22 Osprey and the CH/MH-53 Super Stallion to the Defense Logistics Agency in Philadelphia. The Defense Logistics Agency is part of the US Department of Defense, and they manage the global supply chain of equipment for the army, navy and air force. Specifically, Meggitt will supply fuel bladders for the F/A-18 Super Hornet, V-22 Osprey and CH/MH-53 Super Stallion aircraft. The terms of the contract are yet to be fully released, however it was reported that the contract extension has a potential value of $130 million. The deal will last six years and deliveries are set to commence in early 2020. The update provided today is certainly impressive for Meggitt, however the firm will; remain cautious with the worries that they have speculated over – which could lead to a more steady year of trading.Croda International see profits dip across 2019, as sales remain flat
Croda International (LON:CRDA) have given shareholders a steady set of annual results, which have been released on Tuesday morning.
The FTSE 100 listed firm said that profits had dipped across 2019, and this was largely due to flat sales.
Steve Foots, Chief Executive Officer commented:
“In 2019, we delivered a resilient performance with a strong margin maintained and increased cash flow, despite subdued market conditions. This is testament to Croda’s focused strategy and strong business model.”
Despite the dip in profits and stagnating sales, Croda managed to lift their dividend payout – which will come as a pleasing note for shareholders.
The chemicals company recorded pretax profit of £302.3 million, which dipped 4.9% on the £317.9 million figure recorded in 2018.
In terms of revenue, which also slipped slightly the 2019 figure was £1.38 billion seeing a minute drop from £1.39 billion one year ago.
On a better note, the multinational declared a total ordinary dividend of 90p across 2019, seeing a 3.4% jump from 87p in 2018.
The Life Sciences Unit for Croda performed particularly strongly, as the firm saw sales rise 8% year on year to £350.2 million.
However, the Performance Technologies division saw a slump of 5.7% in sales to £430.2 million.
Foots concluded: “An excellent performance in Life Sciences was reflected in sales growth and margin improvement. Sales in Personal Care were significantly impacted by a slower US market and by new legislation in China, but conditions improved in line with our expectations in the final quarter, and sector profitability increased further. Performance Technologies slowed in line with the wider sector, due to weak industrial demand.
“In the year ahead, subject to trading conditions remaining similar, we expect to make further progress in our consumer markets, whilst demand in industrial markets is expected to remain weak but stable. Our growth will be second half weighted.
“With our new Purpose, Smart Science to Improve LivesTM, we will continue to increase the positive impact our products deliver for our customers and their consumers. We will also reduce the negative impact our activities have on our fragile world. The combination of a healthy innovation pipeline, recent investments, cost saving benefits and a robust business model is expected to underpin performance.”
Going forward the firm said that they remained confident to deliver expectations across 2020, and that progress will be made subject to steady trading conditions.
“In 2019, we delivered a resilient performance with a strong margin maintained and increased cash flow, despite subdued market conditions. This is testament to Croda’s focused strategy and strong business model.
In the year ahead, subject to trading conditions remaining similar, we expect to make further progress in our consumer markets, whilst demand in industrial markets is expected to remain weak but stable. Growth will be second half weighted.
With our new Purpose, Smart Science to Improve LivesTM, we will continue to increase the positive impact our products deliver for our customers and their consumers.
We will also reduce the negative impact our activities have on our fragile world. The combination of a healthy innovation pipeline, recent investments, cost saving benefits and a robust business model is expected to underpin performance.”
Shares in Croda International trade at 4,764p (-3.17%). 25/2/20 9:54BST.
US Election: Does Bernie Sanders hold the high hand?
The US Election is proposing a lot of different questions for the US people, the global audience and political commentators – I want to look at Bernie Sanders’ chance of taking this election by storm.
Bernie Sanders, who is currently the favorite to run against Donald Trump in November is making significant ground as the prime candidate to represent the Democrat Party.
The Democrat candidate produced an impressive win at the Nevada caucuses, and this is one signal that he is not a candidate that Donald Trump should be taking lightly.
The Vermont Senator has the ability to connect with a younger audience, who are engaged with left wing Liberalism in a country which has been dominated by the far right over the last few years.
One interesting thing, is that even in this election Bernie Sanders has still described himself as a democratic socialist – a title which does come with its backlash.
Super Tuesday is just around the corner, and whilst candidates have been sprinting to win as many votes, Sanders is taking a marathon approach.
This election cycle is certainly producing some interesting results – with the recent announcement that billionaire Bloomberg would running inside the Democrat Party, the race has never been so open.
Going back to Bernie Sanders however, the Vermont Senator seems to have caught an interesting audience, mixing diversity with youth. He was seen as the top choice for voters under 65, and has particularly sparkled with college graduates and those who have not been university educated.
Sanders may not need the support of big businesses and corporations, unlike his rival Republican counterpart in Donald Trump.
One of the reasons why Trump won the Presidency in 2016 was because of his pledges to favor big business, cutting red tape and creating an economy dominated by multinationals.
Most of his funding comes from small businesses, and individuals who align with his theory of social equality and communitarianism.
Internal competition comes from former Vice President Joe Biden, who at one points seemed like the favorite to run against Trump – however Sanders’ strategy team seem to be playing the right cards, and just before Super Tuesday he holds the highest hand.
Party internals have had their say on Sanders, suggesting that he is too liberal to beat Trump in November – however if Sanders continues his impressive run, then there may not be a chance to stop the Senator.
There is still a lot of ground to be made up in this election, and to suggest that Sanders will win the Democratic nomination is rather speculative.
Super Tuesday is famous for its decisive nature in any US Election, and if Sanders can capture a significant amount of ground then this could put him in a favorable position going forward.
“Together we will defeat the most dangerous president in the modern history of this country,” Sanders said in Houston, a certainly bold statement within a state that is traditionally red.
Just from the quote above, this sums up Sanders’ approach to this election. In essence, he has nothing to lose – he can afford to be brave, challenge the current incumbent and change the face of American politics if he successfully beats Trump in November.
However, this is all speculative at the moment. As is any great US Election – bumps, twists and turns are always round the corner. There is a real chance on Super Tuesday for Sanders to stampede his mark on this election, and the fact that he is connected with what seem to be ‘marginalized’ communities under the Trump administration puts him in great footing to be the Democrat Party’s challenger to the current US President.
Anglo Asian set out expectations to expand in Azerbaijan
Anglo Asian Mining PLC (LON:AAZ) have updated the market on their recent geological activity.
The firm has told shareholders that they are intending to expand production to current operations, following strong drilling results.
Anglo Asian mainly operate in Azerbaijan: Gedabek, Gosha, and Ordubad. Both Gedabek and Gosha are currently producing gold, with Ordubad in the exploration phase.
At the Gedabek operations, the firm said that they are developing existing work to define mineable mineralization – and the firm said that these are showing positive results.
Anglo Asian added that they hope to publish a new resource in 2020, which will please shareholders and the firm.
At Gosha, this is still in its early state exploration phase. However the firm has remained confident to look at the subsurface potential of this site within the year.
Finally, results from Ordubad have been “extremely encouraging”, and work at this mine will continue to expand over 2020.
Stephen Westhead, Director of Geology & Mining, commented,
“Our geological work programme continues over our three contract areas. At the Gedabek contract area, work on the two new targets of Avshancli and Gilar is progressing well. Good grades at Avshancli have been returned from the surface geological work and drilling and the vein system at Gilar has been confirmed. The mineralisation footprint of the Gadir underground mine has also been further extended. Additionally, we have started investigation of a new ZTEM target, Parakend Bugor which is next to Korogly.
“Considerable work has been carried out at Gosha which has been successful confirming the mineralisation below the existing Gosha mine. Surface geological work in the Gosha mine area also indicates the presence of gold. At Ordubad, the majority of the assay results from drilling at Keleki and Dirnis completed earlier in the year have now been received and show significant gold and copper grades. We have also started trench sampling at a new target “Aylis” at Ordubad and are beginning to corroborate the results of the WorldView-3 remote satellite sensing against data obtained from field geology.
“The Company is also providing shareholders, in a separate announcement today, a summary of the overall progress of our exploration programme and the work planned in 2020.”
Anglo Asian bloom following debt free announcement
A few days back, Anglo Asian announced that the firm was debt free. The firm described this as a significant achievement for Anglo Asian, and shareholders should be sharing the delight just as much as senior management. Anglo Asian noted that they had signed a loan agreement with Pasha Bank in February 2018, which was worth $15 million. The loan had an interest rate of 7% per year, however only $13.5 million was eventually drawn down meaning that the whole loan has now been paid. The firm now has a real opportunity to bloom without debt burdens, and the future remains exciting for Anglo Asian. Shares in Anglo Asian trade at 148p (-0.67%). 24/2/20 13:59BST.Goldplat shares crash 15% despite swinging to an interim profit
Goldplat plc (LON:GDP) have seen their shares crash on Monday following the releasing of their interim results.
The gold miner said that they had swung to an interim profit, in the six month period which ended December 31.
The firm said that an increase in the price of gold and improved performance drove the results in the direction of a profit.
Across the six month period, Coldplay posted pretax profit of £1.6 million compared to a loss of £837,000 the year prior – which is an impressive accomplishment for the firm.
Revenue however did slip for the firm, as this totaled £12.5 million seeing a 3.2% decline from £12.8 million one year ago.
Goldplat in particular praised the strong performance of its operations in both South Africa and Ghana.
At their Kilimapesa mine the firm reported reduced losses due to the Kenyan Revenue Authorities paying £523,000 in VAT reclaims.
The Chairman of Goldplat, Matthew Robinson commented:
“I am delighted to report that Goldplat continues to deliver effectively on its stated strategic objectives at its operating subsidiaries. Our portfolio of core assets consists of two gold recovery operations in South Africa and Ghana, which recover gold from by-products of the mining process, thereby providing mines with an environmentally-friendly and cost-efficient way of removing waste material, and the Kilimapesa Gold Mine in Kenya, currently under care and maintenance.
The progress made on key initiatives to increase long term visibility of earnings in the recovery businesses, specifically improved recovery on lower grade contaminated material and strengthened relationships within mining industry, are encouraging. Although monthly production levels are still dependent on sourcing of quality material, we are confident that at current higher gold prices, we will remain profitable for remainder of the year.”
Goldplat’s strong third quarter
At the end of October, the firm told the market that they had seen rising profits in the third quarter. Sales were up by almost a third to £4.5 million at its main Goldpat Recovery business after a tough 2018 trading year. For one of its significant operations, Goldplat Recovery business, the firm said sales were up by almost a third to £4.5 million, compared to £3.4 million in the same period last year. The producer also unveiled plans to increase the life of its near-capacity tailings storage facility by 12 to 18 months at a cost of £250,000. Alongside this plans were confirmed to start building a new storage facility to be approved, constructed and commissioned during the next year, set to cost between £500,000 to £700,000. The group said that operations in Ghana had increased to £23,000 profit in the third quarter, while Kilimapesa Gold halved its losses from the previous quarter to £127,000 due to a reduction in costs after it was put on care and maintenance. Shares in Goldplat trade at 6p (-15.51%). 24/2/20 13:25BST.Finsbury Food see double digit profit growth within strong interim results
Finsbury Food Group plc (LON:FIF) have given shareholders a positive set of interim results on Monday afternoon.
The firm expressed their optimism for the rest of the year going forward as they saw double digit profit growth in the first half.
The bakery and food firm, said that pretax profit was £8.8 million for the 26 weeks to December 28 – this was a strong performance from Finsbury as this figure reported an 18% climb from the £7.5 million a year earlier.
Additionally, revenue also surged 4.7% to £159.5 million from £152.3 million – which was one of the headline statistics from the update today.
The firm also said that they would be lifting their interim dividend to 1.23p per share, which sees a 6% rise from 1.16p paid the year before.
Finsbury added that they had a net debt of £32.6 million – however there was a continued focus on driving productivity and efficiency.
Commenting on the results, John Duffy, Chief Executive of Finsbury Food Group Plc, said:
“The first half was both a period of growth and of successful delivery against our strategic priorities. Revenue and profit were up, largely driven by organic performance in UK Bakery as well as new business wins and the first full six-month contribution from our Free From business. We made encouraging progress in the optimisation of our cash flow in the period and reduced our debt levels, and are pleased to announce a further increase in the dividend.
Moving into the second half, while the macroeconomic pressures affecting the industry look set to continue, our long-term, consistent and disciplined approach to investment and unwavering focus on driving increased productivity and efficiency across the Group means Finsbury is now a much more resilient business and better equipped to weather difficult trading conditions.
The broad channel, customer and product diversification we now have in the business gives us a solid platform on which to build and we continue to benefit from access to higher growth opportunities such as Free From and consumer niches such as artisan bread. Notwithstanding the ongoing market-wide headwinds, there is positive sales momentum in the business and a growing number of exciting opportunities that gives us confidence in Finsbury’s prospects for the full year, which remains in line with expectations.”
Finsbury Food beat January blues
In January, the firm gave another update which showed slowing progress. Finsbury said that first half sales have been rising year on year, as the baker and food producer has been seeing declines in other sectors. In the six months to December 28, Finsbury Food’s sales rose by 4.7% from a year before to £159.4 million. In its UK Bakery division, sales grew by 5.8% year-on-year during the first half, but in its Overseas division, they declined by 3.5%. Looking at the UK, Finsbury told the market that it had received licensing agreements with Walt Disney Co (NYSE:DIS) in order to produce themed cakes. The interim results are impressive for the firm, and Finsbury seemed to have performed well in a saturated market. Shares in the firm trade at 101p (+0.60%). 24/2/20 12:59BST.GSK and Clover Biopharmaceuticals collaborate on coronavirus vaccine
Multinational pharmaceuticals titan, GSK (LON:GSK) have told the market that they have teamed up with Clover Biopharmaceuticals are to collaborate on a coronavirus vaccine.
Shares in GSK trade at 1,631p (-1.63%). 24/2/20 12:40BST.
Writing at this moment – it seems that the coronavirus has been around for months, however in the few weeks that it has dominated news headlines, the number of incidents have been rising.
Clover said that they have entered a research collaboration deal with GSK for Clover’s “protein-based coronavirus vaccine candidate” known as COVID-19 S-Trimer.
“We are proud to contribute to cutting edge research from scientists at Clover Biopharmaceuticals in China as part of our strategy to make our adjuvant technology available to selected partners who have a promising vaccine candidate against the newly emerged coronavirus.” said Thomas Breuer, Chief Medical Officer of GlaxoSmithKline Vaccines.
“The use of an adjuvant is of particular importance in a pandemic situation since it may reduce the amount of vaccine protein required per dose, allowing more vaccine doses to be produced and therefore contributing to protect more people.”
The public sector are still adjusting their response and approach to the outbreak of the coronavirus – however the input from the private sector has been positive.
Despite the number of affected individuals decreasing by the day, the larger issue still needs to be addressed.
The collaboration deal between Clover and GSK will hopefully bring about a positive vaccine which can be deployed with effective use to combat the coronavirus spread.
“At Clover we look forward to evaluating the combination of GSK’s pandemic adjuvant system and our S-Trimer as a vaccine candidate. Utilizing our proprietary Timer-Tag© technology that has been shown to be recognized by antibodies produced by multiple previously-infected coronavirus patients, S-Trimer is being rapidly developed to support global efforts in combating this current and any future coronavirus outbreaks,” said Joshua Liang, Chief Strategy Officer and Board Director at Clover
“We are proud to work with GSK, and we are encouraged by the progress of our S-Trimer vaccine program,” said Steven Gong, VP Business Development & Strategy at Clover. “To this end, we recognize that collaborations will be critical to accelerating the development of a successful new vaccine in times of emergency, and we continue to invite any interested regulatory, academic or industry parties to contact us for this noble common cause.”
Fresnillo give update on Juanicipio project
Fresnillo Plc (LON:FRES) have seen their shares jump as they gave shareholders an operational update on Monday.
Shares in Fresnillo trade at 740p (+4.02%). 24/2/20 12:03BST.
The mining firm said that it has accelerated the development of the Juanicipio project in Mexico’s Zacatecas state.
Following this update, Fresnillo added that they expect to start producing gold and silver at this site by mid 2020 – which is ahead of anticipated schedule.
Currently, Juanicipio is 56% owned by Fresnillo and 44% owned by partner MAG Silver Corp (TSE:MAG).
Fresnillo continued to share the good news, by saying that construction is well underway, engineering is complete, and all major process equipment has been purchased and received on site.
The mine’s capital expenditure has increased by 11% to $440 million from its estimate of $395 million back in January 2018 – however the firm has remained confident that results will be yielded from this.
The newly operating mine is expected to reach 85% name plate capacity in the fourth quarter of 2021, and 90% to 95% in 2022.
Fresnillo said that they are expecting total average annual production of 11.7 million ounces of silver, 43,500 ounces of gold, with an initial mine life of 12 years – which is an impressive group of statistics.
Octavio Alvídrez, Chief Executive Officer of Fresnillo plc, said:
“Juanicipio is an outstanding project which will generate strong returns for our shareholders, and significant benefits to the region. We continue to de-risk and refine the best construction plan that will drive the most value and ensure we capitalise on the opportunity that Juanicipio presents. I am pleased to confirm we are accelerating development of the underground mine and as a result, I expect the mine will be producing silver and gold ahead of schedule in 2020.”
George Paspalas, Chief Executive Officer of MAG Silver, added:
“We are very excited about the decision to bring forward the underground mine development of the Juanicipio project. Producing quantities of saleable mineralisation provides a very beneficial de-risking opportunity that gives confidence to both partners that the originally envisioned plant production ramp up may be improved.”
Fresnillo’s fourth quarter
At the end of January, Fresnillo reported a quarterly rise in gold output however annual production has fallen short of expectations. Fresnillo, told the market that they had produced 233,744 ounces of gold in the fourth quarter of 2019, 11% higher on the previous quarter and 0.7% higher year-on-year. Looking on an annualized basis across 2019, Fresnillo saw gold production fall 5.1% to 875,913 ounces. In December, it had set guidance at 885,000 ounces, from previous guidance of 880,000 ounces to 910,000 ounces. Within the silver production sector, fourth quarter production was impressive standing at 13.8 million ounces. Silver production did see a 3.7% climb from third quarter production, however this figure did represent an 11% fall on the figure on year ago. In 2019, the figure was 54.6 million ounces, 12% lower year-on-year. Fourth-quarter production improved on the third quarter due to higher quarterly grades at San Julian and Saucito, but fell on the prior year due to a year-on-year fall in grades at Saucito and lower volumes at San Julian. The update today will certainly impress shareholders, and the new operational mine should give Fresnillo confidence to deliver strong production volumes once production commences.AB Foods expect strong Primark performance but speculate over coronavirus impact
AB Foods plc (LON:ABF) have told the market that the coronavirus may impact their half year results.
The multinational firm have said that they expect to announce their interim results at the end of April – however the recent outbreak of the coronavirus may dampen these.
Primark sales and performance remained strong – the firm said, and that this retail business is yet to be impacted by the coronavirus.
The first half ends on February 29 for AB, and the firm said that expects growth in sales and adjusted operating profit to rise from £639 million from a year ago.
The firm said: “For the half year, we expect sales growth for the group and expect adjusted operating profit to be ahead of last year on both a lease-adjusted and reported basis. On a lease-adjusted basis we expect adjusted earnings per share to be ahead of last year, with lower net financial expenses offsetting an increase in the effective tax rate. On a reported basis, the dilutive effect of the adoption of IFRS 16 on earnings will result in a small reduction in adjusted earnings per share in the first half.
We expect strong growth in adjusted operating profit in the second half, driven by profit growth for Primark and a second half weighting of the AB Sugar profit recovery. As a result, our outlook for the full year for the group is unchanged with progress expected, on both a reported and a lease-adjusted basis, in adjusted earnings per share.”
Following the outbreak of the coroanvirus, AB Foods have said that the main priority of the firm is the the health and safety of colleagues – and that businesses could be effected.
The firm concluded “A number of our food businesses have operations in China. The Chinese sugar campaign was completed in January before the outbreak developed significantly. Our AB Mauri, AB Agri and Ovaltine factories are operating, but at reduced capacity due to labour and logistics constraints.”
Looking at the performance of their retail brand Primark, AB Foods have said that they expect first half sales to be 2.5% higher year on year, and 4.2% at constant currency.
On a reported basis, Primark’s first half operating profit will be ahead of the prior year – with UK sales expected to be 3% higher and EU sales rising 5.3% at constant currency, helped by growth in France, Belgium and Italy.
AB Foods commented:
“Sales in the Eurozone are expected to be 5.3% ahead of last year at constant currency with particularly strong sales growth in France, Belgium and Italy. Our new store in Milan traded ahead of expectation and our store in Ljubljana, Slovenia continued to trade strongly. Like-for-like sales for the Eurozone were 0.5% ahead, continuing the much-improved performance reported in the January trading statement. This was driven by excellent like-for-like sales in France and Italy and, at this early stage, a notable improvement in Germany which was delivered through a series of operational changes made by the new management team.
Our business in the US continued to perform strongly, delivering like-for-like sales growth, with particularly strong trading at the store in Brooklyn. Together with the contribution from the planned store openings at American Dream, New Jersey and Sawgrass Mills, Florida, we expect a much-improved operating result for the year.”