By James Davey
LONDON (Reuters) – Associated British Foods said it was 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 also announced another 500 million pounds ($649 million) share buyback programme, raised its dividend by 50%, and forecast good Christmas trading at Primark.
“The group is well positioned for the medium term, supported by strong cash generation and good momentum in our retail and food businesses,” it said.
In the year ended Sept. 14, the group’s adjusted operating profit, its preferred earnings measure, rose to a slightly better than expected 1.998 billion pounds ($2.6 billion) from 1.51 billion pounds in 2023/24. Revenue climbed 2% to 20.1 billion pounds.
Primark’s profit jumped 51%, while earnings in the grocery business, which includes products such as Twinings tea, Jordans cereals, Kingsmill bread and Ovaltine drinks, 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 pounds from the 199 million pounds made in 2023/24, before recovering in 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.
It said over the medium and long term, Primark had significant opportunities to grow in the United States, France, Spain, Italy and Central and Eastern Europe, with new stores contributing around 4% to 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, while British rival ASOS forecast a jump in earnings in its 2025 financial year.
($1 = 0.7702 pounds)
(Reporting by James Davey; Editing by Christina Fincher and Mark Potter)
