Plans for Primark’s entry into the US market following more strong trading in Europe triggered a big rise for shares in owner Associated British Foods yesterday.
The FTSE 100 listed conglomerate, whose operations cover sugar, agriculture, retail, grocery and ingredients, was the stand-out performer in an otherwise lacklustre session for the London market.
The top flight was 11.2 points lower at 6,670.5 as weak manufacturing data in China proved a major obstacle to further gains after Tuesday’s euphoria over a flurry of major deals in the pharmaceuticals sector helped to add 56 points.
Yesterday’s decline came despite more encouraging signs from the eurozone after a key measure of business activity rose to its highest level in three years.
AB Foods delivered the biggest blue-chip rise of the session after Primark’s plans for a store in Boston by the end of next year were accompanied by a 26% rise in retail profits.
City analyst Darren Shirley of Shore Capital described Primark’s half-year performance as stunning.
Despite the poor record of UK firms in the US retail market, shares were 9% or 241p higher at 2,963p as AB Foods also reported a 4% rise in group profits to ÂŁ468million.
Elsewhere, drugs stocks continued to improve on the back of deal-making activity by GlaxoSmithKline and speculation linking AstraZeneca to a potential takeover by US giant Pfizer. Glaxo rose 7.75p to 1,647.75p and Astra added 72p to 4031.5p, having risen by 5% yesterday.
In the FTSE 250, holiday firm Thomas Cook rose 6.3p to 179.9p after its turnaround strategy was backed in a broker upgrade from Barclays, whose analysts expect a resumption of dividends in 2016.
The biggest decline in the FTSE 250 Index came from power station business Drax after it was offered an investment contract from the government to convert just one of its two coal-fired generators to biomass fuel.
Drax shares slumped 12% or 19.35p to 663p.
The grocery division of AB Foods lifted half-year profits by 31% to ÂŁ126million, as Twinings Ovaltine benefited from rising sales of tea in the United States and Jordans and Ryvita both achieved further growth.
The division’s Allied Bakeries business made progress in the highly competitive UK bread market with volumes and margins both ahead of last year.
The Kingsmill 50/50 range continued to be the main driver of growth.
The group’s progress in grocery and retail was offset by a sharp drop in profits from its sugar division following a slump in global prices ahead of the end of EU sugar quotas in 2017.
The 60% drop in profits to ÂŁ64million came despite favourable growing conditions through the mild winter in the UK, which resulted in good beet quality and high sugar content.