Rising commodity prices proved a mixed blessing for Associated British Foods in the year to September, with the net result that last year's profit levels were maintained. In fact, taking off the previous year's one-off £28m gain, associated with the sale of the Polish sugar operation, left profits showing a marginal gain.
On the sugar production side, adjusted operating profits rose 31 per cent to a record £315m, thanks to a sharp rise in sugar prices and a significant increase in Chinese beet production. These were more than enough to offset the effects of frost damage on the UK crop last winter.
But the group's clothing chain, Primark, was hit by high cotton prices and an increase in VAT. The group decided to absorb some of these increases, resulting in a fall in operating margins from 12.5 per cent to 10.2 per cent. So Primark's turnover rose 13 per cent to £3.04bn, but adjusted operating profits fell 8 per cent to £309m. The ingredients business also came under pressure from tough competition and higher raw material costs, which left operating profits down 46 per cent at £56m.
Panmure Gordon is forecasting full-year profits in the current year of £975m and EPS of 84.3p.
| ASSOCIATED BRITISH FOODS (ABF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,138p | MARKET VALUE: | £9.0bn | |
| TOUCH: | 1137-1138p | 12-MONTH HIGH: | 1,197p | LOW: 916p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 726p* | NET DEBT: | 22% | |
| Year to 17 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 6.80 | 508 | 46.7 | 19.5 |
| 2008 | 8.20 | 527 | 45.2 | 20.3 |
| 2009 | 9.30 | 495 | 45.5 | 21.0 |
| 2010 | 10.2 | 763 | 69.3 | 23.8 |
| 2011 | 11.1 | 757 | 68.7 | 24.8 |
| % change | +9 | - | - | +4 |
Ex-div: 7 Dec Payment: 13 Jan *Includes intangible assets of £1.9bn, or 239p a share | ||||
