5th Nov 2024 08:56
(Alliance News) - Associated British Foods PLC on Tuesday launched a new GBP500 million share buyback and boosted its dividend, as annual profit leapt, with improvement in all parts of the fast fashion to food ingredients conglomerate.
The London-based retailer and food manufacturer said pretax profit rose 43% to GBP1.92 billion in the 52 weeks that ended September 14 from GBP1.34 billion a year prior.
Adjusted pretax profit increased 33% to GBP1.96 billion from GBP1.47 billion, narrowly ahead of Visible Alpha consensus of GBP1.92 billion.
Revenue grew 1.6% to GBP20.07 billion from GBP19.75 billion, or by 4% at constant currency, slightly below VA consensus of GBP20.24 billion.
Revenue at Primark, the firm's retail arm, increased 4.9% to GBP9.45 billion from GBP9.01 billion, or by 6% at constant currency.
Here, adjusted operating profit leapt 51% to GBP1.1 billion from GBP735 million. Adjusted operating profit margin climbed to 11.7% from 8.2%.
AB Foods said this reflected a strong performance across key growth markets, including the US, France, Spain, Italy and Central and Eastern Europe, as well as growth in its largest market, the UK.
Sales in the UK & Ireland rose 2%, with like-for-like sales growth of 0.7%, despite a decline of 1.6% in the second half.
Overall, annual LFL sales grew 1.2% at Primark, with an increase of 0.5% in the second half.
Looking ahead, AB Foods is targetting mid-single digit percentage sales growth at Primark in financial 2025.
Elsewhere, AB Foods disclosed all segments grew in financial 2024, with Grocery, Ingredients, Sugar and Agriculture all ahead.
Grocery sales rose 4% with adjusted operating profit up 17%, reflecting strong margin improvement overall and investment in marketing.
Ingredients sales rose by 2% and adjusted operating profit by 12%, led by yeast and bakery ingredients.
Sugar sales and adjusted operating profit were strongly ahead of 2023, although European sugar prices reduced sharply in the fourth quarter as previously reported.
This pricing correction is expected to hurt sugar profitability in financial 2025. AB Foods expects Sugar unit adjusted operating profit in financial 2025 of GBP50 to GBP75 million compared to GBP199 million in the recent financial year. Profitability is then expected to recover in financial 2026 and be in line with 2024.
Agriculture adjusted operating profit increased 3% in the recent year.
Reflecting the improved financial picture, AB Foods increased its total dividend by 50% to 90.0 pence from 60.0p. This includes a final dividend of 42.3p, and a special dividend of 27.0p.
The company also announced a further share buyback programme of GBP500 million, expected to be completed before the end of financial year 2025.
AB Foods completed GBP565 million of share buybacks in financial 2024, with an additional tranche of GBP100 million completed in 2025 to-date.
Chief Executive George Weston said: "This was a year of very strong financial and operational progress across the group. We delivered a substantial improvement in profitability, excellent cash generation and strong returns as a result of consistent, multi-year investment and a return to some normality in our markets and supply chains."
He added: "The group is well positioned for the medium term, supported by strong cash generation and good momentum in our retail and food businesses."
In response, shares in AB Foods rose 2.7% to 2,350.00 pence each in London on Tuesday. The wider FTSE 100 index was up 0.2%.
By Jeremy Cutler, Alliance News reporter
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