Primark And Groceries Fuel Profits At AB Foods

By Sarah O'Sullivan
Primark And Groceries Fuel Profits At AB Foods

Associated British (AB) Foods noted that it is well set up for medium-term growth, as it reported a 32% rise in full-year profit, driven by robust performances from its grocery division and Primark clothing business.

Shares in the group – which also has large sugar, ingredient and agriculture businesses – were up 3% on Tuesday, after it announced a £500 million share buy-back programme.

It also raised its dividend by 50% and forecast good Christmas trading at Primark, known in Ireland as Penneys.

AB Foods noted, ‘The group is well positioned for the medium term, supported by strong cash generation and good momentum in our retail and food businesses.’

Profit

In the year ending 14 September, the group’s adjusted operating profit rose to a slightly better-than-expected £1.998 billion – up from £1.51 billion in 2023/24.

ADVERTISEMENT

Revenue climbed by 2%, to £20.1 billion.

Primark’s profit jumped by 51%, while earnings in the grocery business – which includes products such as Twinings tea, Jordans cereals and Kingsmill bread – rose by 14%.

The group noted that it was confident on the near-term outlook for all its divisions, with the exception of sugar, wherein it reiterated caution due to a reduction in European sugar pricing that was first flagged in September.

It forecast adjusted operating profit for sugar in 2024/25 to fall to between £50 million and £75 million from the £199 million made in 2023/24, before recovering the following year.

The group noted that Primark – which does not offer online delivery – is targeting mid-single-digit percentage sales growth in 2024/25, with an adjusted operating margin in line with the 11.7% achieved in 2023/24.

ADVERTISEMENT

It added that over the medium and long terms, Primark had significant opportunities to grow in the US, France, Spain, Italy, and Central and Eastern Europe, with new stores contributing about 4-5% a year to its total sales growth for the foreseeable future.

Separately on Tuesday, German online fashion retailer Zalando reported a higher profit margin for the third quarter.

British rival ASOS also forecast a jump in earnings in its 2025 financial year.

Read More: Tesco UK Announces Additional Share Buy-Back Worth £700m

Stay Connected With Our Weekly Newsletter

Processing your request...

Thanks! please check your email to confirm your subscription.