3rd Nov 2015 07:17
LONDON (Alliance News) - Associated British Foods PLC Tuesday reported a drop in pretax profit in its recently-ended financial year as currency headwinds made it difficult to grow revenue and its sugar business was hit by low sugar prices.
AB Foods warned that results will also suffer in the new year.
The group, which owns discount fashion retailer Primark and British Sugar and which operates an agriculture and consumer goods arm, said pretax profit in the year ended September 12 fell 30% to GBP717 million from GBP1.02 billion the year before, whilst revenue fell 1% to GBP12.80 billion from GBP12.94 billion.
AB Foods said that its results were hit by unfavourable movements in exchange rates and that if currencies had remained constant, revenue would have risen by 2%.
The business also suffered from food price deflation, with the sugar particularly taking a hit from declines in both EU and world sugar prices.
AB Foods will pay a total dividend of 35.0 pence per share, which is 3% higher than the prior year.
"We intend to maintain investment in expansion opportunities, most notably for Primark. After three years of large profit declines for AB Sugar, we expect greater stability in profit next year ahead of EU quota removal in 2017. However, the substantial moves in exchange rates last year, notably the weakening of the euro and emerging market currencies, will have a significant influence on the results for the coming year. At current rates the translation impact would be at a similar level to last year but the transactional impact would be greater and will be seen primarily in Primark and British Sugar," the company warned.
"At this early stage we expect the currency pressures to lead to a modest decline in adjusted operating profit and adjusted earnings for the group for the coming year," AB Foods added.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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