4th Nov 2014 07:29
LONDON (Alliance News) - Associated British Foods PLC Tuesday reported a higher pretax profit for its last financial year, despite a drop in revenue, but warned on its outlook for the year ahead, citing further heavy falls in its sugar business, limited growth in earnings per share and a marginal decline in its operating profit.
The food ingredients and retail group reported a 1% decline in its operating profit for the 52 weeks ended September 13 to GBP1.08 billion, down from GBP1.09 billion the prior year. However the group managed to report a higher pretax profit for the year as finance expenses fell. For the year it posted a pretax profit of GBP1.02 billion, up from GBP868 million a year earlier, even though revenue fell to GBP12.94 billion, from GBP13.32 billion.
The group's low-cost fashion chain Primark drove profit growth in the period, offsetting heavy profit falls in its struggling sugar business on the back of record low sugar prices.
"Much lower sugar prices in the EU held back the group's profit growth although, operationally, Sugar performed well," said Chief Executive George Weston in a statement.
In the year ahead, AB Foods said its expects Primark's expansion to continue, with its Grocery, Ingredients and Agriculture businesses making further progress. However, it warned on its sugar business, AB Sugar.
"With the continuing fall in EU sugar prices, and volatility in the world sugar price, we expect a further large reduction in profit from AB Sugar, but this will put much of the effect of the structural changes in EU prices behind us," the company said.
Adjusted earnings per share rose 6% to 104.1 pence, while the group declared a 6% increase in its dividend for the year to 34.0 pence.
However, AB Foods again warned on its outlook, citing subdued growth.
"At this early stage we expect a marginal decline in adjusted operating profit for the group but the impact on earnings will be mitigated by much lower tax and interest charges. We therefore see limited opportunity to grow adjusted earnings per share in the new financial year," the company said.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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