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AB Foods: 2019 Annual Results Announcement

London / UK. (abf) Food, ingredients and retail group Associated British Foods PLC (ABF) announced the following results statement for the year ended 14 September 2019.

Financial Headlines   Actual     Constant currency
Group revenue GBP 15.8 billion +2 % +2 %
Adjusted operating profit GBP 1,421 million +1 % +1 %
Adjusted profit before tax GBP 1,406 million +2 %
Adjusted earnings per share GBP 137.5 pence +2 %
Dividends per share GBP 46.35 pence +3 %
Gross investment GBP 837 million
Net cash GBP 936 million
Statutory operating profit GBP 1,282 million -5 %
Statutory profit before tax GBP 1,173 million -8 %
Basic earnings per share GBP 111.1 pence -13 %
Statutory operating profit down 5% to GBP 1,282 million mainly as a result of an exceptional charge of GBP 79 million included in this year’s income statement. This year includes a greater loss on closure of businesses, and so statutory profit before tax was down 8 percent to GBP 1,173 million and basic earnings per share were down 13 percent to 111.1 GBPence.

Chief Executive George Weston said: «The group delivered a resilient performance this year, with strong profit growth from Grocery and Primark which more than offset the profit decline in Sugar. We continued to pursue the opportunities to grow our businesses with a gross investment of over GBP 800 million. Next year the group is well-positioned for further progress, with the continued expansion of Primark, a material improvement in our Sugar profit and strong profit growth in Grocery.»

Adjusted operating profit is stated before the amortisation of non-operating intangibles, profits less losses on disposal of non-current assets, transaction costs, amortisation of acquired inventory fair value adjustments and exceptional items. These items, together with profits less losses on the sale and closure of businesses, are excluded from adjusted profit before tax and adjusted earnings per share. References to operating profit in the Operating Review are based on this adjusted operating profit measure.

Constant currency figures are derived by translating the 2018 results at 2019 average exchange rates, except for countries where consumer price inflation has escalated to extreme levels, in which case actual rates are used.

References to underlying profit for Twinings Ovaltine and Grocery exclude a GBP 12 million charge in 2019 in respect of the closure of the Twinings tea factory in Jinqiao, China.

Further cost reductions at troubled bakery business

At Allied Bakeries revenues progressed this year following price increases agreed with a number of customers. As previously advised, the termination of ABF’s largest private label bread contract will lead to a volume loss in the next financial year. As a consequence, the carrying value of the assets in this business was no longer supported by ABF’s forecasts of its discounted future cash flows and a non-cash impairment charge of GBP 65 million has been recognised as an exceptional item in the income statement. ABF has taken steps to reduce the capacity and closed the Cardiff bakery at the end of the year. During the coming year ABF will implement cost reductions in a number of operational areas to further reduce the losses in this business. For additional information please read ABFoods’ PDF file below (541 KB).