The British company Associated British Foods (ABF), parent company of the fashion retailer Primark, reported a surprisingly high adjusted pre-tax profit of 1.96 billion pounds (2.54 billion US dollars) for the financial year ended September 14. This significantly exceeds market expectations of 1.91 billion pounds and represents an increase of approximately 33 percent compared to the previous year.
Primark, which accounts for the majority of the company's profit, increased its adjusted operating profit from 735 million to 1.11 billion pounds. The operating margin improved from 8.2 percent to 11.7 percent. The fashion retailer's revenue grew by 6 percent to 9.45 billion pounds.
CEO George Weston emphasized the positive development: "We recorded a significant improvement in profitability, outstanding cash generation, and strong returns, resulting from consistent investments over several years and a return to normality in our markets and supply chains." A key factor in this was the decrease in material and freight costs, which had risen in recent years due to the pandemic and geopolitical tensions.
The group's total revenue increased from 19.75 to 20.07 billion pounds, driven by growth in both Primark and the food divisions. The adjusted operating profit rose by 32 percent to 2.00 billion pounds, exceeding market expectations of 1.955 billion pounds.
The company announced an increase in the dividend: In addition to a final dividend of 42.3 pence per share, a special dividend of 27.0 pence will be distributed, increasing the total payout to 90.0 pence per share—a significant rise compared to the 60.0 pence of the previous year. Furthermore, ABF is initiating a share buyback program with a volume of 500 million pounds, which is expected to be completed by the end of the 2025 fiscal year.
For the upcoming fiscal year, Primark expects mid-single-digit sales growth, supported by the continued expansion of its store network, which is expected to contribute 4 to 5 percent annually to overall sales growth. However, the group's sugar division is expected to suffer from falling sugar prices in Europe; the adjusted operating profit of this segment is expected to be between 50 and 75 million pounds in the fourth quarter, in line with the profit warning from September.
ABF remains optimistic about the future: "The group is well-positioned for the medium term, supported by strong cash generation and positive momentum in our retail and food businesses.
