Primark And Groceries Fuel Profts At AB Foods

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

Associated British (AB) Foods said 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 Primark clothing business and grocery division.

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

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

AB Foods said, “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.

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Revenue climbed 2% to £20.1 billion.

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

The group said it was confident on the near-term outlook for all its divisions, with the exception of sugar, where 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 said Primark – which does not offer online delivery – is targeting mid-single percentage digit sales growth in 2024/25, with adjusted operating margin in line with the 11.7% achieved in 2023/24.

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

Separately on Tuesday, German online fashion retailer Zolando 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

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