Associated British Foods Reports Strong Underlying Growth
Associated British Foods has reported revenue of £7.3 billion for the 24 weeks ended 4 March 2017, up 19% on the previous year, with adjusted operating profit ahead by 36% to £652 million. The growth reflects the benefit of the devaluation of sterling on the translation of ABF’s overseas results, as some two thirds of group revenues and operating profit are generated outside the UK.
The total increase of £171 million in adjusted operating profit included £51 million of currency benefit. The underlying growth of the group was also strong with revenue up 7% and adjusted operating profit up 23% at constant currency.
ABF completed the disposal of two businesses during the first half – US herbs and spices and its south China cane sugar operations. These disposals generated a profit of £255 million, with an associated tax charge of £82 million. As a result, profit before tax was 92% higher than last year and earnings per share were 79% ahead.
ABF’s sugar businesses were the largest single driver of the group’s underlying profit improvement in the first half. Higher sugar prices and further significant savings generated by performance improvement both contributed to this and to a more acceptable return on investment. Growth at Primark, ABF’s retail operation, continued with revenue increasing by 12% on a comparable basis with last year at constant currency.
George Weston, chief executive of Associated British Foods, says: “The underlying growth of the group at constant currency was strong in the first half. Primark delivered a substantial increase in selling space which, together with its strong consumer offering, contributed to a further increase in our share of the total clothing market. Furthermore, we achieved a more acceptable rate of return in Sugar and further good progress was made by our Ingredients and Grocery businesses.”