The Associated British Foods plc (LON: ABF) share price rose 6.17% after releasing its pre-close statement for the financial year ending on 16 September 2023. The company revealed that its outlook for the current year was slightly better than previous expectations. The firm is planning to release its full-year results on 7 November 2023.
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ABF also noted that it had experienced robust sales growth, especially in the Grocery and Ingredients and a slightly better-than-expected performance in Sugar. The company now expects its adjusted operating profit to be firmly ahead of the previous financial year, which triggered the rally in ABF’s share price.
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The company also revealed that it expects to make retail sales worth about £9.0bn, marking a 15% improvement from last year’s sales, with like-for-like sales growth of 9%. The company expects strong Q4 2023 sales growth of 15%, with like-for-like sales rising 8%.
The robust sales growth is driven by selective price increases, strongly performing new stores and well-received product ranges. The company’s digital development is also progressing well, as it has completed the rollout of its enhanced website, with the UK trial of Click and Collect being extended to womenswear.
ABF expects its second-half operating profit margin to be slightly below 8%, while its full-year profit margin should be about 8%. The company outlined its outlook for the 2023-2024 financial year, expecting sugar to improve profitability substantially.
The increase in sugar’s profitability is based on a marked improvement in the performance of British Sugar, driven by the expected better UK sugar beet crop and a significant reduction in Vivergo’s losses.
The company also anticipates a substantial recovery in its Primark gross margins driven by lower material costs, the weakening of the US dollar against the Sterling pound and the euro and lower freight costs, all of which have improved significantly in recent weeks.
Therefore, ABF expects its adjusted operating profit margins from Primark to recover strongly in the next financial year. During Q4 2023, the company’s grocery business traded slightly ahead of expectations, boosted by its international brands such as Ovaltine, Twinings, Patak’s and Blue Dragon.
Associate British Foods (ABF) share price.
The Associated British Foods (ABF) share price rose 6.17% to trade at 2119.0p, from Monday’s closing price of 1995.8p.
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