By Jaime Llinares Taboada

 

Associated British Foods PLC on Tuesday reported higher profits for the fiscal year ended Sept. 18, as Primark earnings rose, and it declared a special dividend alongside the ordinary payment.

The British conglomerate, which owns the Primark fashion retailer, made a pretax profit of 725 million pounds ($983.4 million) in fiscal 2021, up from GBP686 million a year earlier.

Adjusted operating profit fell 1% to GBP1.01 billion. Primark's adjusted operating profit was up 15% at GBP415 million. Analysts at RBC Capital Markets said that earnings for the entire group and for the Primark business were better than expected.

Shares at 0800 GMT were up 4.3% at 1,939 pence.

Revenue was broadly flat at GBP13.88 billion.

AB Foods said that it expects Primark trading to continue to improve, with sales recovering at least the GBP2 billion lost due to store closures in the last fiscal year, which should lead to Primark's adjusted operating margin rising above 10%.

The FTSE 100 group warned that the retail unit is seeing supply-chain issues and raw material and labor inflation, but it expects this to be broadly mitigated by currency gains arising from a weaker U.S. dollar.

ABF added that it is working to offset these impacts through cost savings and that its food businesses will implement price increases where necessary.

"Taking these factors into account, we expect significant progress, at both the half and full year, in adjusted operating profit and adjusted earnings per share for the group," it said.

Moreover, ABF said that it expects to grow its retail-store estate to 530 stores from 398 over the next five years.

The company declared a final dividend of 20.5 pence a share and a special dividend of 13.8 pence, bringing combined full-year payments to 40.5 pence. The special distribution is in connection with a new capital cash allocation policy which is based on the group's strong balance sheet and confidence in the future, ABF said.

 

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

 

(END) Dow Jones Newswires

November 09, 2021 03:24 ET (08:24 GMT)

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