Primark Owner ABF Profits Jump, Raises Interim Dividend

Associated British Foods (LON: ABF), the owner of Primark and various food brands, reported a substantial increase in profits for the first half of their financial year on Tuesday. 

The company saw a 37% year-on-year surge in adjusted profit before tax, reaching £911 million. Revenue grew 5% to £9.73 billion, fueled by strong performances in both Retail and food businesses. Adjusted operating profit also jumped significantly by 46%, reflecting a recovery in profit margins. ABF CEO George Weston credits a return to normalcy in markets and supply chains alongside the impact of past investments driving operational improvements.

ABF invested £571 million strategically in initiatives for growth, capacity, and sustainability. Additionally, free cash flow reached £468 million, driven by both profit growth and a reduction in working capital outflow.

The Retail segment, which includes Primark, thrived with a 7.5% increase in revenue and a 46% jump in adjusted operating profit to £508 million. Like-for-like sales grew 2.1%, driven by effective pricing strategies and popular product lines. ABF is also expanding its Click & Collect service in the UK.

The Grocery segment also saw significant profitability improvement, led by strong performances in US-focused brands and reduced losses at Allied Bakeries. Other segments like Sugar, Ingredients, and Agriculture all experienced profitability growth due to various factors including improved Vivergo performance, strong AB Mauri contribution, and lower input costs.

ABF increased the interim dividend to 20.7 pence per share, reflecting the company's earnings growth. Looking ahead, ABF expects continued strong performance for the full year, exceeding initial expectations with significant growth in profitability and cash generation. 

Primark is seen continuing to perform well in the second half, driven by ABF's store expansion programme, and we focus on driving volumes. 

“While the consumer environment remains soft, we expect to benefit from the strength of our value proposition, our product relevance and category stretch and our increasingly effective digital engagement,” said the company.

ABF.L shares jumped in the early part of trading, sitting more than 8% up at the time of writing.