TIDMABF
RNS Number : 0160Z
Associated British Foods PLC
20 January 2022
20 JANUARY 2022
Trading update
Associated British Foods plc today issues a trading update for
the 16 weeks to 8 January 2022 summarising the significant trading
developments since the last market update.
Group revenue
Group revenue from continuing operations for the 16 weeks ended
8 January 2022, compared to the 16 weeks ending 2 January 2021, was
16% higher at actual exchange rates. At constant currency, revenue
from continuing operations was 19% higher. The following table sets
out revenue on a segmental basis for the period with changes to the
prior year.
Change at
Year to date Last year constant
GBPm GBPm Change currency
============ ============ ========= ====== =========
Grocery 1,215 1,222 -1% +2%
Sugar 609 545 +12% +12%
Agriculture 545 507 +7% +8%
Ingredients 528 497 +6% +10%
Total Food 2,897 2,771 +5% +6%
Retail 2,672 2,031 +32% +36%
Group 5,569 4,802 +16% +19%
============ ============ ========= ====== =========
Grocery, Sugar, Agriculture and Ingredients revenues in
aggregate were 6% ahead of last year at constant currency. Sugar
revenues were driven by strong European sugar prices and
Ingredients revenues by a recovery in volumes from COVID-19
affected levels last year. All businesses have experienced
inflationary pressures in raw materials, commodities, supply chain
and energy. Margins in Grocery and Ingredients were impacted where
sales price actions have lagged the effects of input cost
inflation.
Retail sales were 36% ahead of last year at constant currency
with an operating profit margin ahead of our expectations. All of
our stores are trading and remained open throughout the period,
except for short periods in Austria and the Netherlands.
Like-for-like sales in this period improved compared to the final
quarter of our 2021 financial year. The improving trend in customer
footfall was interrupted in December by the rapid rise in COVID-19
cases of the Omicron variant but we are now seeing a recovery in UK
and Ireland footfall.
Cash flow year-to-date has been strong compared to last year
driven by good trading, and at Primark lower markdowns and the sale
of inventory carried forward from the autumn/winter season last
year.
References to changes in revenue in the following segmental
commentary are based on constant currency.
Grocery
Grocery sales were 2% ahead of last year. Our businesses have
experienced high levels of input cost inflation and margins were
reduced in the quarter due to the phasing of the implementation of
mitigating pricing actions.
Twinings Ovaltine performed well this period with strong
Ovaltine revenue growth with higher volumes in emerging markets.
Twinings revenue growth was driven by the growth and new product
launches in Wellbeing teas which offset a reduction in some retail
sales from the high COVID-19 affected volumes last year.
ACH revenue increase was driven by several price increases for
its vegetable oils, which mitigated the impact of rising commodity
costs. The sales performance at George Weston Foods in Australia
was driven by good results from Tip Top foodservice and gluten-free
retail bread products along with higher Don meat volumes.
Sugar
AB Sugar revenue was 12% ahead of last year, with operating
profit ahead of last year. The revenue increase was driven by
stronger European sugar prices, higher Illovo domestic sales and
improved pricing for bioethanol produced by British Sugar at
Wissington. All businesses have been focused on mitigating the
effects of significant cost input inflation, particularly in energy
costs.
European sugar prices increased over last year as a consequence
of low European sugar stocks combined with higher world market
prices. Estimates for European sugar production in the 2021/22
campaign are slightly higher with a recovery in yields to more
normal levels, supported by good growing conditions. Our UK and
Spanish businesses have largely contracted sales for the financial
year at these pricing levels.
Sugar production in the UK for the 2021/22 campaign is expected
to be 1.04 million tonnes, compared to 0.9 million tonnes produced
in the last campaign with higher yields more than offsetting the
reduced growing area. Energy costs are at very high levels but
forward contracts have avoided the impact of these during the first
quarter. Preparation for the start of production at the Vivergo
biofuel plant in Hull is well advanced.
The trading performance in Spain has improved, with higher
prices and volumes partially offset by a higher proportion of sugar
produced from cane raws.
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. Contracts have been placed
and site works commenced for a major expansion of our sugar
production capacity in Tanzania.
AB Sugar China trading performance was in line with last
year.
Agriculture
AB Agri revenue was 8% ahead of last year with higher selling
prices reflecting commodity and energy cost increases.
Ingredients
Sales in Ingredients were 10% ahead of last year driven by
volume recoveries in a number of our speciality ingredients
businesses. However, margins were lower than the same period last
year as significant inflationary pressures impacted costs ahead of
planned price actions.
AB Mauri revenues were ahead despite lower demand for retail
yeast and retail 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 good growth
in enzymes, yeast extracts and a recovery in extruded cereals.
Retail
Sales were 36% ahead of last year when we saw widespread closure
of our stores in the UK and Europe. Stores in retail parks and town
centres continued to outperform destination city centre stores with
like-for-like sales in retail parks ahead of pre-COVID levels. Over
the last two years, since the start of the pandemic, we have opened
25 stores lifting our retail selling space by 7%.
Sales in our UK stores were well ahead of last year.
Like-for-like sales were 10% below two years ago and improved on
the final quarter of our financial year 2021. Trading was impacted
by a decline in footfall as a result of the rapid rise in Omicron
cases but has improved in recent weeks.
Sales in Continental Europe were also well ahead of last year.
Like-for-like sales for the period were 14% below two years ago
with footfall continuing to be impacted by the high level of
Omicron infections. However, total sales were 2% below two years
ago which includes an increase of 12% in retail selling space. We
estimate a sales loss of some GBP30m relating to the short periods
of store closures in Austria and The Netherlands during the
period.
Our US business was the standout performer and delivered 4%
like-for-like sales growth in the period compared to pre-COVID
levels and sales were 37% ahead of two years ago.
Total Primark sales this period were 5% lower than pre-COVID
levels in the same period two years ago. Like-for-like sales were
11% below.
Operating profit margin in the period was ahead of our
expectations and is expected to be over 10% at the half year. This
reflects a recovery in sales densities over the same period last
year. The effect of inflationary pressure on raw materials and
supply chain in this first quarter has been broadly mitigated by a
favourable US dollar exchange rate compared to last year and a
reduction in store operating costs and overheads. We are proposing
to simplify our in-store UK retail management structure as part of
our ongoing programme to improve the efficiency of our store retail
operations.
The pressure of disruption to the supply chain we experienced in
the autumn has alleviated although we are still experiencing some
delays in dispatch at ports of origin and we expect longer shipping
times to continue for some time.
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 on 8 January 2022 we were trading from 401
stores and 17.0 million sq ft of retail space, which compared to
16.5 million sq ft a year ago. Three new stores were opened in the
period: Catania in Sicily, Italy, and Vigo and Girona 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 are making good progress with new
store signings in line with our ambition to grow our store estate
with a particular focus on the major markets of the US, France,
Italy and Iberia. Since the start of the financial year, we have
signed a number of leases including a new store in the centre of
Bucharest, our first in Romania, which, with Slovakia, will take
Primark into 16 markets.
Trading outlook
In our Grocery, Sugar, Ingredients and Agriculture businesses we
have seen an escalation in the cost of energy, logistics and
commodities. We have been implementing plans to offset these
through operational cost savings and, where necessary, the
implementation of price increases. We expect an increase in the
adjusted operating profit for Sugar. We expect reduced adjusted
operating profit margins in Grocery and Ingredients at the half
year, due to phasing in fully recovering cost but a recovery in the
run rate of these margins by the financial year end.
Primark's like-for-like sales to date improved on the fourth
quarter of our last financial year and delivered a strong operating
profit margin. Our stores are open, although trading is being
impacted by lower footfall as a result of the rapid rise in Omicron
cases in recent weeks. It is difficult to predict future trading
conditions with certainty, but we have seen an encouraging
improvement in footfall in the UK and Ireland as the disruption
from Omicron reduces. Looking ahead, we expect Primark sales from
now to April to be significantly better than sales in the
comparable period in the last financial year, when the estate was
largely closed.
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, as previously advised.
Taking these factors into account, our outlook for the Group is
unchanged, with significant progress, at both the half and full
year, in adjusted operating profit and adjusted earnings per share
for the Group.
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.
- The ESG investor presentations made last year are available on
our website. A further briefing is planned for May on the
environmental factors that are most material for the Gro up.
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
TSTSFEFAUEESEDF
(END) Dow Jones Newswires
January 20, 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