Associated British Foods - Primark trading in line; forecasts unlikely to change

Davy Research
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Associated British Foods’ (ABF) FY19 pre-close trading update was broadly in line with our expectations. Selling space growth at Primark will continue to be the key driver of profit growth as like-for-likes (lfl) remain subdued. US dollar strength against the British pound poses a headwind to Primark margin in FY20 which has been reflected in our forecast model. While we remain constructive on the name, we see limited scope for upgrades in the near-term.