Associated British Foods (ABF) has reported a 15% increase in sales to £19.8bn in the year to September.

The food processing giant, which also owns retailers including fashion outlet Primark, said it had performed “extremely well” and is now well positioned for the year ahead.

ABF’s adjusted operating profits climbed 4% on last year to £1.5bn, while its margin declined to 7.7% from 8.4% last year, as a result of inflationary pressures.

The UK-based group, which owns food brands including Kingsmill and Ryvita, said that its significant growth in group sales was driven “in large part by pricing actions”.

ABF chief executive, George Weston, suggested the group had this year faced “significant economic challenges caused in part by major geopolitical events”.

“Looking back on the year, it is clear to me that the group performed extremely well and is as a result now well positioned for the year ahead,” Weston commented.

“Profitability in our food businesses moved ahead as a result of the appeal of our products and the strength of our brands, both of which supported us in the recovery of high levels of input cost inflation without disrupting our customer relationships.”

ABF also stated that it had continued momentum across its retail division, with revenues “well ahead” at £9.0bn, supported by selective pricing and well received ranges. The group reported that the adjusted operating profit in its retail division was 3% lower at £735m, with a margin of 8.2% reflecting its decisions on pricing.

Weston said that trading at Primark was “excellent” under the circumstances.

“At the beginning of the year, we implemented selective price increases partially to protect profitability, on the grounds that the significant input cost inflation was temporary,” he added. “That careful pricing delivered as intended, with customers continuing to shop with us enthusiastically.”

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, commented: “The key Primark business has benefitted from a changing retail landscape over the past few years, especially with the demise of Debenhams and Topshop.”

Chiekrie added: “One of ABF’s key strengths is its diversified portfolio of businesses, which includes many well-known food brands such as Kingsmill, Ryvita and Patak’s. This diversification helps to spread out risk, ensuring the company isn’t overly reliant on any one product or division.

“That’s been a benefit in recent times as unhelpful weather in the prior year dented performance at the group’s African sugar business, Illovo. But after strong pricing actions and much-improved production levels, sugar revenue soared nearly 30%.

“The strong financial performance means there’s plenty of room to return excess cash to shareholders, with a special dividend and new £500m buyback programme on the way.”

Share Story: