Associated British Foods – strong sugar performance sweetens results
- Associated British Food reported full-year revenue of £19.8bn, up 15% ignoring exchange rate impacts
- Underlying operating profit rose 4% to £1.5bn
- Free cash flow improved from an outflow of £84m to an inflow of £269m
- Special dividend and new £500m share buyback programme announced
Aarin Chiekrie, equity analyst at Hargreaves Lansdown:
“The key Primark business has benefitted from a changing retail landscape over the past few years, especially with the demise of Debenhams and Topshop. That’s helped sales grow 15% at Primark, up to £9.0bn for the full year, with 27 new store openings and an improved website helping Primark to ring more cash through the tills. Margins here fell slightly as the group chose not to pass the full extent of inflated input costs onto consumers in order to keep its price-sensitive customers happy amidst the current cost-of-living crisis.
One of ABF’s key strengths is its diversified portfolio of businesses, which includes many well-known food brands such as Kingsmill, Ryvita and Patak’s. This diversification helps to spread out risk, ensuring the company isn’t overly reliant on any one product or division. That’s been a benefit in recent times as unhelpful weather in the prior year dented performance at the group’s African sugar business, Illovo. But after strong pricing actions and much-improved production levels, sugar revenue soared nearly 30%. The strong financial performance means there’s plenty of room to return excess cash to shareholders, with a special dividend and new £500m buyback programme on the way.”
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