The owner of Primark, food conglomerate Associated British Foods, has announced a growth in revenue and profit in the last financial year, bucking the recent trend of a downward spiral experienced by British high street retailers.
In its latest report, Associated British Foods posted a 1% rise in group revenue to £15.6bn, while pre-tax profit went up 5% to £1.4m. Retail revenue was also up 6%, coming in at £7bn and operating profit up 15% to £843m.
In the report, the group stated that it “delivered its most significant profit growth in recent years” in the 12 months to 15 September.
George Weston, chief executive of Associated British Foods, said: “This was another year of progress for the group. We continued to pursue the opportunities to grow our businesses with a gross investment of £1.2bn.
“Strong profit performances were delivered by each of Primark, grocery, agriculture and ingredients. These more than offset the decline in sugar profit which was caused primarily by low prices in the first year after the structural change in the EU sugar regime. Looking ahead, management have clear plans for further investment and for pursuing opportunities for business improvement.”
Analysis: Sophie Lund-Yates, equity analyst, Hargreaves Lansdown
ABF continues to open up new stores, which given the challenges other bricks and mortar retailers are facing looks a bold move – but it’s working. Overall sales growth is continuing despite declining like-for-like sales, and a popular summer range means margins and profits continue to climb.
Primark’s US expansion plan seems to be finding its feet too, it’s barely up and running but it’s already moving out of a crawl. The group opened another store there this year and plans to slowly ramp up spending in the region. The US is a huge potential market, so even small steps are a very welcome sign.
Results in the sugar business were less appealing following a sharp decline in European sugar prices. While not ideal, this wasn’t unexpected, and weakness was partially offset by a stronger showing in the Grocery and Ingredients divisions.
So no shockwaves from ABF, but then again when you’re heading in the right direction already, no news tends to be good news. All in all, ABF’s latest numbers were pretty palatable.