Primark Owner AB Foods Profit Rises on Robust Margin Recovery -- Update

Dow Jones04-23

By Michael Susin

Primark owner Associated British Foods raised its dividend after robust margins and normalizing markets helped drive up profit in the first half of its fiscal year.

The British conglomerate said on Tuesday that adjusted operating profit--the company's preferred metric, which strips out exceptional and other one-off items--for the period ended March 2 rose to 951 million pounds ($1.17 billion) from GBP684 million.

Revenue rose 2% to GBP9.73 billion, but missed market expectations of GBP9.90 billion taken from Visible Alpha and based on 13 analysts' estimate.

"Improvements to the group's operational performance, driven by the investments and strong execution over the last few years, are now becoming visible. Group profit margins are recovering accordingly to more normal levels," Chief Executive George Weston said.

The group added that is on track to deliver significant growth in both profitability and cash generation ahead of expectations at the start of this financial year.

The board has declared an interim dividend of 20.7 pence a share, up from 14.2 pence a year ago.

Adjusted operating profit at the company's budget retailer Primark jumped 46% to GBP508 million, and its profit margin was 11.3%. The retail arm is the company's biggest earnings contributor.

Sales rose to 7.5% to GBP4.5 billion, while the market expected GBP4.54 billion. The increase reflected continued growth in selling space, it added.

The company said it expects Primark to continue to perform well in the second half, driven by its store expansion program despite warning that the consumer backdrop remains soft.

It anticipates modest levels of like-for-like growth as the group focuses on driving volumes, and a moderating improvement in the second half.

AB Foods didn't comment on its previous guidance for Primark, which targets an adjusted operating profit margin above 10%.

However, the group said it will boost the investment in its business and added that it will see an increase in spending in each of the next few years.

Write to Michael Susin at michael.susin@wsj.com

(END) Dow Jones Newswires

April 23, 2024 03:05 ET (07:05 GMT)

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Primark Owner AB Foods Profit Rises on Robust Margin Recovery -- Update

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