TIDMABF
RNS Number : 9324C
Associated British Foods PLC
28 February 2022
28 FEBRUARY 2022
Pre-Close Period Trading Update
Associated British Foods plc issues the following update prior
to entering the close period for its interim results for the 24
weeks to 5 March 2022, which are scheduled to be announced on 26
April 2022.
Trading outlook
For the half year, we expect sales and adjusted operating profit
for the Group to be strongly ahead of last year. Furthermore, we
expect sales and adjusted operating profit to be ahead of the
pre-COVID levels achieved in the half year to 29 February 2020.
Primark sales for the first half are expected to be well over
60% ahead of last year at constant currency with an operating
profit margin of some 11%. This reflects the fact that all our
stores remained open and trading throughout the period except for
short periods in Austria and The Netherlands. The effect of
inflation on raw materials and the supply chain in Primark this
first half has been broadly mitigated by a reduction in store
operating costs and overheads and a favourable US dollar exchange
rate. Like-for-like sales improved compared to the final quarter of
our 2021 financial year.
All our food businesses have experienced increasing inflationary
pressures in raw materials, commodities, supply chain and energy.
We have been taking steps to offset these higher input costs
through operational cost savings and where necessary in Grocery,
Ingredients and Agriculture, the implementation of price increases.
However, actions on price inevitably lag input cost inflation. As a
result, we expect some margin reduction in these three businesses
at the half year but expect our plans to deliver a recovery in the
run-rate of these margins by the financial year-end. We expect
further growth in profit at AB Sugar at the half year.
As previously advised, the stronger profitability of Primark,
and the consequent change in the weight of profit by tax
jurisdiction for the Group will result in a decrease in the Group's
effective tax rate for the year to closer to pre-COVID levels.
We expect growth in adjusted operating profit for the Group in
the second half. As a result, our outlook for the full year is
unchanged with significant progress expected in adjusted operating
profit and adjusted earnings per share for the Group.
References to changes in revenue in the following segmental
commentary are based on constant currency.
Cashflow and funding
Cashflow in the period is expected to be much improved on the
same period last year when Primark store closures resulted in an
estimated cash outflow of some GBP650m. This year the cashflow also
benefited from the sale of autumn/winter inventory brought forward
from the prior year. Net cash before lease liabilities is expected
to be some GBP1.5bn at the half year, compared to GBP705m at the
first half last year.
Including lease liabilities of GBP3.2bn, net debt at the half
year is expected to be some GBP1.7bn giving a financial leverage
ratio of 0.8 times. The successful launch on 10 February of our
inaugural public bond of GBP400m, 2.5 per cent, due 2034 will
diversify the Group's sources of funding and extend the duration of
our borrowings. The remaining GBP297m of Private Placement Notes
mature this financial year and in the 2024 financial year.
Grocery
Revenue in the first half is expected to be 2% ahead of last
year. Our businesses experienced high levels of input cost
inflation and margins are expected to be reduced due to the later
phasing of mitigating pricing actions.
Twinings Ovaltine performed well in this period driven by
Ovaltine revenue growth in Germany, Nigeria, Switzerland and, in
particular, Thailand. Twinings revenue growth was driven by new
product launches in Wellbeing teas which offset a reduction in
sales from elevated levels through the retail channel as a result
of COVID-19 last year.
Allied Bakeries sales were below the same period last year,
following its decision to exit the Co-op business in April 2021.
Westmill sales were well ahead of last year with a strong recovery
in the restaurant trade. Acetum, our leading Balsamic Vinegar
producer, continued to grow with an improved sales mix towards
branded and premium products.
ACH revenue growth was driven by the price increases for its
vegetable oils implemented over the last year to mitigate the
impact of higher commodity costs. Strong bakery ingredient volumes
more than offset declines in US retail yeast volumes compared to
2021 pandemic highs. The sales performance at George Weston Foods
in Australia was led by good results at our foodservice and bakery
business Tip Top and profitability is expected to improve with
better trading at the Don meat business.
Sugar
AB Sugar traded strongly in the first half. Revenue is expected
to be over 20% ahead of last year driven by both higher domestic
volumes in Illovo and Azucarera and higher sugar and bioethanol
prices. All businesses continued to focus on reducing the cost of
sugar production through on-going cost reduction programmes. These
cost savings and the contribution from higher sales more than
offset the effects of significant input cost inflation,
particularly energy costs, and the start-up costs at our Vivergo
bioethanol plant. As a result, adjusted operating profit is
expected to be ahead of last half year.
EU sugar prices continued to improve over last year as a
consequence of low European sugar stocks and higher world market
prices. Although current estimates for EU sugar production in the
2021/22 campaign are slightly higher than the prior year, with a
recovery in yields to more normal levels, EU pricing is supported
by higher world sugar prices. Our UK and Spanish businesses have
largely contracted sales for the year at much improved prices
compared to last year.
UK sugar production for the 2021/22 campaign is expected to be
1.05 million tonnes, compared to 0.9 million tonnes produced in the
last campaign, with good growing conditions supporting higher
yields and mitigating the reduced growing area. Despite beet
logistics issues delaying the start-up of the campaign and
affecting throughput levels, the factories have performed well.
Energy costs are at very high levels although substantial forward
cover largely mitigated the margin impact of this during the first
half. We are expecting an adverse margin impact in the second half.
We have benefitted from strong pricing both from the electricity we
produce and export to the grid and from the bioethanol produced
from sugar. Preparations are now well advanced for the re-starting
of the Vivergo plant in March.
The performance in Spain improved, with higher prices and
volumes. Sugar production is expected to be significantly higher
than last year, although mostly in the form of lower margin refined
raws. Significantly improved sales volumes reflected higher demand
in Iberia and reduced imports from other EU countries.
Illovo continued to deliver strong domestic sales in Zambia,
Malawi and Tanzania along with a strong contribution from
co-products in South Africa. However, there was some disruption to
production in Zambia, Eswatini and Mozambique in the period.
Illovo's sugar production for the full year is expected to be
broadly in line with last year with earlier season start-ups
planned later this year to offset the delays already experienced at
the end of the current season.
AB Sugar China trading performance was in line with last
year.
Agriculture
Revenue in the first half at AB Agri is expected to be well
ahead of last year with higher selling prices reflecting commodity
and energy cost increases. We expect profit margins to be reduced
in the period compared to the first half of the last financial year
due to the later phasing of mitigating pricing actions.
Ingredients
Revenue in the first half is expected to be 10% ahead of last
year driven by volume recovery in a number of our speciality
ingredients businesses. Cost efficiencies have partially offset the
impact of the significant cost inflation but margins at the half
year will be lower than at the same time last year with a later
phasing of planned price actions.
AB Mauri revenues were ahead of the same period last year, but
the growth was reduced by lower demand for retail yeast and bakery
ingredients compared to last year when COVID-19 restrictions were
driving the popularity of home baking. The businesses in ABF
Ingredients performed well, with revenue significantly ahead driven
by sustained volume recoveries and price increases to compensate
for input inflation.
Retail
Primark sales for the first half are expected to be well over
60% ahead of last year. All of our stores are trading and remained
open throughout the half year, except for short periods of store
closures in Austria and The Netherlands. This compared to prolonged
periods of store closure in the UK and Europe in the first half of
last year.
Over the last two years we have opened 27 new stores, increasing
our retail selling space by 8%. Total sales for Primark are
expected to be 4% lower than pre-COVID levels in the same period
two years ago.
Operating profit margin has recovered strongly and is now
expected to be some 11% in the first half. This brings half year
margin close to the pre-COVID levels achieved two years ago.
Like-for-like sales have improved compared to the final quarter
of our 2021 financial year and for the first half are expected to
be 11% lower than pre-COVID levels in the same period two years
ago. Customer footfall is picking up again in most markets,
particularly the UK and Ireland, after the disruption caused by the
rapid rise in Omicron infections in the middle of the period.
Sales in our UK stores are well ahead of last year.
Like-for-like sales have improved and are expected to be 9% below
two years ago and total sales are expected to be 8% below two years
ago. Stores in retail parks and town centres continue to outperform
destination city centre stores with like-for-like sales in retail
parks ahead of pre-COVID levels.
Sales in Continental Europe are also well ahead of last year.
Like-for-like sales for the period are expected to be 14% below two
years ago reflecting the continued impact of Omicron on customer
footfall. In France, Iberia and Italy, our major opportunities for
growth, like-for-like sales are now improving. Total sales are
expected to be 2% below two years ago which include a 12% increase
in retail selling space. We estimate a sales loss of some GBP32m
relating to the short periods of store closures in Austria and The
Netherlands during the period.
Our US business continues to outperform the rest of the store
estate and is on track to deliver 2% like-for-like sales growth in
the period compared to pre-COVID levels with total sales 35% ahead
of two years ago.
We have seen a very positive initial reaction from customers
across all markets to the bursts of colour in our new spring/summer
collections. Luggage and swimwear have performed well in recent
weeks, giving us confidence as we look ahead to the holiday season
after two years of travel restrictions. Response to the launch of
our new collaboration with Greggs in the UK was strong with high
levels of engagement across our social channels driving excitement
around the Primark brand, particularly among the younger customer
base.
Operating profit margin in the period is expected to be some 11%
at the half year. This mainly reflects our stores trading for the
whole of the period and an increase in sales densities over the
same period last year. The effect of inflation on raw materials and
supply chain costs in this first half has been broadly mitigated by
a favourable US dollar exchange rate and a reduction in store
operating costs and overheads. With our stock purchases largely
committed for the second half of the financial year, we expect some
reduction in the operating profit margin from that achieved in the
first half reflecting further inflationary pressures.
The pressure of disruption to the supply chain experienced in
the autumn has continued to alleviate despite some delays in
dispatch and slightly longer lead times.
The roll-out of the Oracle stock management system across our
store estate is progressing well and we expect all stores to be
equipped with state-of-the art point of sale terminals by the end
of 2022. We are also on track to launch our new, improved
customer-facing website in the UK by the end of March, and across
all our markets by the autumn. The new website will showcase many
more of our products and will provide customers with product
availability by store.
Retail selling space increased by 0.2 million sq ft since the
financial year end and at 5 March 2022 we will be trading from 402
stores and 17.0 million sq ft of retail space, which compared to
16.5 million sq ft a year ago. Four new stores were opened in the
period: Catania in Sicily, Italy, and Vigo, Girona and Cadiz in
Spain. In addition, we relocated to larger premises in Gloucester
in the UK.
We expect to add a net 0.5 million sq ft of additional selling
space this financial year. We continue to make good progress with
new store signings, in line with our ambition to grow our store
estate to some 530 stores over the next five years, with a
particular focus on the US, France, Italy and Iberia.
ESG
A briefing is planned for 18 May on the environmental factors
that are most material for the Group. Last year's ESG investor
presentations are available on our website.
Notes:
- Definitions of the alternative performance measures referred to
in this announcement can be found in note 30 of our Annual Report
and Accounts 2021.
- Financial leverage is defined as net debt including lease liabilities:
adjusted EBITDA for the year to 5 March 2022
For further information please contact:
Associated British Foods:
John Bason, Finance Director
Tel: 020 7399 6545
Citigate Dewe Rogerson:
Tel: 020 7638 9571
Chris Barrie
Tel: 07968 727289
Jos Bieneman
Tel: 07834 336650
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTUVRWRUUUUUAR
(END) Dow Jones Newswires
February 28, 2022 02:00 ET (07:00 GMT)
Grafico Azioni Associated British Foods (LSE:ABF)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Associated British Foods (LSE:ABF)
Storico
Da Apr 2023 a Apr 2024