Associated British Foods
Geordie Kidston, Head of Research
52 week high yield£32.93 - £24.07
Hist / pros per30.1- 30.3
Equity market cap£25,310m
Associated British Foods (ABF) remains an interesting growth story. It’s low cost, international clothing chain, Primark enters its inaugural US roll-out on September 10th with a carefully planned foray into the North Eastern states of the US, a campus-heavy demographic ideally suited to its price point and proposition. The entry into the US has been carefully planned and pitched astutely against strong local competition. Analysts believe that Primark could double both sales and profits within five years with upside from a more concerted roll-out or better than expected US launch. In the Sugar division, the downturn in the EU sugar market seems to be playing out, with analysts now expecting European sugar profits to trough in 2016. A degree of industry consolidation, lower beet prices and cost savings ought to see the Sugar division return to profit in 2017. With its other divisions providing stability, ABF looks set to remain a growth compounder over the medium term, as the Primark offering continues to grow into the international market place.