AB Foods Gains After First-Half Profit Rises on Sugar

Associated British Foods Plc, the owner of Primark stores, rose the most since November 2008 in London trading after saying first-half profit rose 79 percent on higher Chinese sugar prices.

AB Foods gained 5.9 percent. Net income for the 24 weeks to Feb. 27 climbed to 249 million pounds ($381 million), from 139 million pounds a year earlier, the London-based company said in a statement today. Revenue advanced 9.6 percent to 4.8 billion pounds.

“Profit growth has come from all parts of the group,” Chief Executive Officer George Weston said in a phone interview. “Sugar is well ahead; that, in no small part, is due to the recovery of the European sugar industry profitability.”

Grocery added most to profit, Weston said. The company completed its merger of Jordans breakfast cereal with Ryvita and in the U.S. put its food service and commodity oils businesses into a joint venture with Archer Daniels Midland Co., he said.

“We are taking good momentum into the second half,” Weston said, when asked about the outlook for the company.

AB Foods rose 57 pence to 1,015 pence, the highest level since at least 1986. That values the company at 8 billion pounds.

“While ABF is benefiting from a recovery of profits from depressed levels in some areas, it is also seeing the benefit of its capital investment starting to come through,” analysts led by Graham Jones at Panmure Gordon said in a note to investors today. They have a “buy” rating on the stock and raised their target price to 1,060 pence.

Primark’s revenue rose 19 percent to 1.26 billion pounds as the company opened five new stores in the U.K., Germany, Belgium and Portugal. Sales at stores open at least a year increased 8 percent.