Primark owner Associated British Foods (ABF) had cause for cheer today as annual results came in higher than forecasts.
George Weston, chief executive of the retail, grocery brands, and food ingredients conglomerate, highlighted his satisfaction with “significant margin recovery” at the group’s dominant Primark retail chain, which helped drive a 43% rise in pre-tax profits to £1.91 billion.
Primark sales increased by 6% to £9.44bn for the year ended September 14, as operating profit at the retail division leapt by 53% to £1.1bn.
It came after ABF had issued a profit warning in September, when it said profits from its sugar business would be below expectations amid a fall in European prices.
Read more:
- Should Rangers court Scotch whisky chief as investor?
- A rare boost for troubled Sauchiehall Street in Glasgow
-
Fashion giant blocks Mike Ashley bid to become boss
Mulling the outlook, the group said Primark was targeting mid-single digit percentage sales growth in 2025 amid plans to continue to roll-out its store roll-out programme in its growth markets of Europe and the US, while driving like-for-like sales growth in more mature markets.
Shares in ABF climbed 4% in early trading before later giving up some ground as investors responded positively to the results, which saw ABV report a 38% rise in adjusted operating profit to just under £2bn on a constant currency basis, and announce a further share buyback programme of £500m. This is in addition to £565m of buybacks completed in the 2024 financial year a further £100m since year-end.
ABF also flagged an increase in total dividend of 50% to 90p per share, comprising an interim dividend of 20.7p per share, final dividend of 42.3p per share, and a special dividend of 27p per share.
“The backdrop to today’s results from ABF is its profit warning issued in September,” said Chris Beckett, head of equity research at Quilter Cheviot. “However, the results have come in slightly better than what was guided in that warning, bringing a sense of relief to the share price.”
“The headline figures are impressive, with a 38% growth in profit and a 50% increase in dividend on a 2% rise in revenue. This indicates a strong margin recovery and robust cash generation, which is funding a special dividend and a £500 million buyback.”
George Weston, chief executive of ABF, said: "This was a year of very strong financial and operational progress across the group. We delivered a substantial improvement in profitability, excellent cash generation and strong returns as a result of consistent, multi-year investment and a return to some normality in our markets and supply chains. Above all, these results reflect the excellent work and disciplined focus of our people.
“Primark achieved good sales growth this year and I am particularly pleased with the significant recovery in margin.”
Shares in ABF were trading up 2.8% or 64p at 2,353p at 16.15pm.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here