AB Foods: announces H2-2024 Trading Update

London / UK. (abf) Associated British Foods PLC (ABF) provides an update on trading during the second half of the financial year which will end 14 September 2024. References to sales growth in this commentary are based on constant currency and are in comparison to the same period in the prior year.

Chief Executive George Weston: «The Group has continued to perform well in the second half, delivering good topline growth, a significant improvement in profitability and excellent cash generation. While the British weather was not in Primark’s favour this summer, robust growth in other markets and new store openings have driven good sales overall. Strong margin delivery is enabling increased investment in our product, digital and brand initiatives. Grocery and Ingredients have also grown well in the second half, in line with our expectations, and we will continue to build on this momentum. Sugar profitability this year remains ahead of FY23, however, it is below our previous expectations. This is due to a sharp fall in European sugar prices which is now expected to impact Sugar profitability in FY-2025 before recovering in FY26. Notwithstanding this short‐term volatility in Sugar, we are optimistic about the outlook for the rest of the Group, which is well positioned for further strategic progress supported by continued reinvestment for the longer term.»

Financial year 2025 – initial view

The Group is well positioned for further strategic progress, supported by strong cash generation and good momentum in Retail and most of our food businesses. George Weston:

«We expect Primark to deliver good sales growth in FY-2025 as we continue to execute our store rollout programme and our product, digital and brand initiatives. We expect adjusted operating margin in FY-2025 to remain broadly in line with this year’s level, as gross margins stabilise and we step up investment in strategic initiatives to drive sustainable growth.

«In Grocery, we will continue to drive sales momentum, underpinned by increased marketing investment. We expect to see the full year effect of the profit normalisation in our US‐focused brands. In Ingredients, we expect continued growth in yeast and bakery ingredients and improved growth in speciality ingredients.

«In Sugar, we expect the reduction in pricing seen in Q4 FY-2024 to significantly impact performance in our European sugar business next year, with operating profit for the overall segment now expected to be in the range of GBP 50 million to GBP 75 million in FY-2025. However, we expect profitability to recover in FY26 to be more in line with FY-2024, as a result of the lower beet prices that have been contracted and a rebalancing of supply and demand in the market.

«In Agriculture, we expect some improvement, particularly as our grain trading business recovers in the UK.» or additional information please read the company’s PDF file below (150 KB):

20240905-ABF-Q32024.