24th Apr 2019 07:54
LONDON (Alliance News) - Associated British Foods PLC said on Wednesday it delivered a "robust" set of interim results, despite profit slipping on its sugar performance, as bricks-and-mortar clothing retailer Primark registered a substantial margin improvement.
Revenue for the 24 weeks to March 2 rose 1% to GBP7.53 billion, though pretax profit slipped to GBP515 million from GBP603 million a year ago.
Pretax profit was hindered by GBP79 million in exceptional items, with AB Foods having booked no such charges a year ago. On an adjusted basis, profit was largely in line with a year prior at GBP627 million.
Sales at Primark were 4.4% ahead of a year ago, said AB Foods, driven by increased retail selling space partially offset by a 1.5% decline in like-for-like sales.
With a "much higher margin" - Primark's operating margin coming in at 11.7% versus 9.8% a year ago - the clothing arm's profit was 25% ahead of last year, and the company described the early customer reaction to the spring/summer range as "encouraging".
Primark's performance in the UK was solid, with sales up 2.3% on a year ago and like-for-like sales rising 0.6% as subdued footfall in November was made up by good trading in all other months of the first half.
In the US, the clothing retailer "continued to perform strongly", driven by "excellent trading" at the recently-opened Brooklyn store combined with like-for-like growth.
Dragging down group profit was AB Sugar, which saw adjusted operating profit amount to just GBP1 million in the half, versus GBP106 million a year before, amid a 13% decline in revenue. Grocery profit rose 5% to GBP167 million.
"This is a robust set of results," said Chief Executive George Weston, adding: "Profit at AB Sugar was substantially reduced but, from this period, we expect our sugar profitability to improve."
"The strong underlying growth in Grocery profits demonstrates good momentum. Primark delivered excellent profit growth, driven by further development of our customer experience and selling space expansion," he continued.
AB Foods said its outlook for the current financial year is unchanged, with earnings per share expected to be in line with the year before.
In the second half, AB Foods expects continued underlying growth in its Grocery unit, while the profit outlook for Primark is unchanged and will include an expected margin reduction in the remainder of the year.
AB Foods declared an interim dividend of 12.05 pence, up 3% on last year's 11.70p.
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