LONDON, September 10, 2024 – Associated British Foods PLC (ABF) has provided a trading update for the second half of its financial year, ending September 14, 2024. The company delivered strong top-line growth, improved profitability. And robust cash generation across its businesses despite challenges in certain sectors, particularly in the Sugar division.
CEO George Weston stated, “The Group has continued to perform well, with significant margin improvement and excellent cash flow. Despite unfavorable weather impacting Primark’s sales in the UK and Ireland, growth in other markets and new store openings contributed positively.” Weston added that Associated British Foods remains optimistic about its strategic direction, supported by continued reinvestment for long-term growth.
Primark’s revenue growth is expected to be around 4% for H2, driven by store expansion. However, like-for-like sales projected to decrease by 0.5%, largely due to adverse weather conditions in the UK and Ireland. Sales in the UK are expecting to be 0.5% lower, with a like-for-like decrease of 2% in H2. Despite these challenges, Primark’s new stores in Europe, including Spain, Italy, and France, performed well. In the U.S., Primark experienced 25% sales growth, with three new stores opened and its first marketing campaign launched in the New York area.
The Grocery division continued to perform well, with sales expected to grow by 3% in H2. Brands like Twinings and Ovaltine showed strong growth, particularly in the UK, U.S., and France. The acquisition of The Artisanal Group in Australia further strengthened the company’s position in the premium baked goods market.
The Ingredients division saw strong performance in H2, particularly from AB Mauri’s yeast and bakery ingredients business. Recent acquisitions, including Omega Yeast Labs in the U.S. and Mapo in Italy, contributed positively to the division’s growth.
While Sugar profitability remains ahead of FY23, it fell short of previous expectations due to a sharp decline in European sugar prices. ABF expects this pricing pressure to affect sugar profitability in FY25 before recovering in FY26.
The Group is positioning for continue strategic growth into FY25. Associated British Foods expects Primark to deliver solid sales growth, supported by its store rollout program and digital initiatives. The company’s adjusted operating margin for Primark is projected to remain stable in FY25.
In conclusion, Associated British Foods expects to complete an additional £100 million share buyback by the time of its annual results announcement in November 2024.