Associated British Foods plc
reported a 2.8% increase in group revenue for the 16 weeks to
6 January 2024
. The Grocery segment performed well, with strong performances from US-focused brands and Twinings. AB Mauri in Ingredients maintained strong performance, while parts of
ABF Ingredients
were softer. Agriculture sales were weaker, but certain compound feed markets showed signs of recovery. Sugar production is expected to be significantly above last year, and
Primark
had good overall trading with sales up 7.9% for the period. The Group expects meaningful progress in profitability and cash generation.
Key Highlights:
* Grocery segment revenue increased by 1.8% at actual currency and 5.4% at constant currency
* Ingredients segment revenue decreased by 2.8% at actual currency and increased by 0.9% at constant currency
* Agriculture segment revenue decreased by 12.1% at actual currency and 10.8% at constant currency
Original Press Release:
Jan. 23
--
Associated British Foods
issued the following news release:
Associated British Foods plc
today issues its trading update for the 16 weeks to
6 January 2024
summarising the significant trading developments since the last market update.
Group revenue
The following table sets out revenues by business segment for the period.
The Table can be viewed at: https://www.abf.co.uk/media/news/2024/trading-update
References to growth in the following commentary are based on constant currency except where stated.
Trading performance
Our Grocery business performed well. Our US-focused brands, including our Stratas joint venture in edible oils, continued their strong performances from last year. Within international brands, Twinings traded well across its key markets. Ovaltine had a strong performance in
Western Europe
but was weaker overall as it continued to face challenges in
Asia
.
In Ingredients, our yeast and bakery ingredients business AB Mauri also maintained the strong performance of last year with further growth in sales and profit. As expected, parts of
ABF Ingredients
were softer due to continued customer destocking. In Agriculture, sales were weaker although certain of the compound feed markets are beginning to show signs of recovery.
In Sugar, processing of the
UK
sugar beet crop is under way and indications to date are that sugar production will still be significantly above last year despite the recent weather. This should bring production more broadly into line with historical production levels. Vivergo had a mixed period of trading but was overall much better than last year. Illovo, our sugar business in southern
Africa
, also had a mixed period with a combination of production and currency challenges.
Primark
trading was good overall with sales up 7.9% for the period which was marked by a slow start given the unseasonal warm weather, and strong Christmas trading. Like-for-like sales grew by 2.1% driven by higher average selling prices.
Our product offer performed well in the period. Sales of womenswear and menswear were strong particularly in performance wear, leisure and tailored clothing and in our
Rita Ora
collection. Sales of our Christmas ranges were also strong and sold through well. At the start of the period sales of many of our cold weather categories were initially slower but have much improved with the recent cold temperatures.
In the
UK
, total sales in the period rose by 4.5% with like-for-like sales up by 3.8%. Following the period’s early warm weather challenges, sales grew strongly in the run-up to Christmas. Primark’s market share[1] reached a new record at 7.1% for the 12 weeks to 10 December, up 0.1 percentage point from last year.
In
Europe
excluding the
UK
, total sales in the period rose by 8.1%, with like-for-like sales up by 1.3%. Performance was mixed with some countries trading well and other countries impacted by a combination of strong comparatives in the same period last year and local economic conditions. Sales in the US grew by 45% in the period driven by new store openings.
We exited the period with stock levels in a good position. We continue to monitor the situation in the
Red Sea
but at this stage we do not expect any significant disruption to our supply chain.
Contribution from our new store opening programme remains very strong as our store expansion programme continues with eight stores opened in the period: three in
France
, three in the US, one in
Spain
, and one in
Poland
.
Overall
The Group continues to trade well. We continue to look forward to a year of meaningful progress in both profitability and cash generation, with the profitability improvement being driven by a recovery in
Primark
margin, a marked improvement in British Sugar profitability, and by reduced losses at Vivergo.
At this early stage in the year we now feel more confident in the continued strong performance of both our US-focused brands in Grocery and of AB Mauri in Ingredients.
We also feel more confident in the delivery of the
Primark
adjusted operating margin in this financial year, driven by a further improvement in product gross margin. This should insulate us well against potential additional costs of supply due to the disruption in the
Red Sea
should they arise.
Footnote:
[1] Kantar,
Primark
market share of the total
UK
clothing, footwear and accessories market including online by value, 12-week data to
10 December 2023
Source:
Associated British Foods
[Category: Food,
Packaged Foods & Meats
, Financial Results]
