Associated British Foods (ABF) Shares Gain Following Final Results

Associated British Foods (LON: ABF) shares rose on Tuesday morning following the publication of its final results for the fiscal year ended September 17.

The company told investors that volatile input cost inflation will be the most significant problem in the coming fiscal year.

The Primark owner posted a pre-tax profit of £1.08 billion, up from £725 million the previous year, with the clothes store benefiting from more typical customer behavior following the Covid-19 pandemic. Group sales were £17 billion, exceeding consensus estimates, while adjusted operating profit came in at £1.43 billion.

ABF shares are currently up more than 4% at the time of writing. However, so far, in 2022, they are down over 26%.

Primark’s overall sales were £7.7 billion, a 43% increase over the previous year, with the business claiming a strong rise in customer footfall and sales densities as markets recovered from the pandemic. As a result, Primark’s UK like-for-like sales returned to pre-pandemic levels, and adjusted operating profit margin was 9.8%.

The company lifted its final dividend to 29.9p per share, bringing the total payment to 43.7p per share, up from 40.5p last year. ABF also announced a £500 million share buyback scheme.

“Looking ahead, substantial and volatile input cost inflation will be the most significant challenge in the new financial year, and our businesses will continue to seek to recover these higher costs in the most appropriate way,” stated George Weston, ABF’s Chief Executive.

“Primark has faced significant input cost inflation and sharply moving currency exchange rates. We have decided to hold prices for the new financial year at the levels already implemented and planned and to stand by our customers, rather than set pricing against these highly volatile input costs and exchange rates.”

The company anticipates a revenue increase from a rise in food prices, as well as space expansion at Primark.

ABF’s outlook remains unchanged, with adjusted operating profit and adjusted profits per share expected to be below the previous fiscal year.

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