The star of Associated British Foods' five divisions was once again discount clothing chain Primark, which accounts for 36 per cent of group profits. The retailer's profits leapt 35 per cent in the year, assisted by a surge in margins from 10.9 per cent to 12.5 per cent as the business found new economies of scale and benefited from the weak US dollar, which made sourcing clothes cheaper.
The sugar business also put in a sweet performance, reporting a 43 per cent increase in profits, helped by a strong recovery from the Chinese operation and investment in increased capacity in Africa. Meanwhile, the grocery business, which owns UK brands such as Kingsmill and Twinings and accounts for 24 per cent of group profit, posted 20 per cent profit growth as the benefits of restructuring and a recovery in the US bottled oil business came through.
The group has been investing heavily with £699m spent in the financial year, but it now seems to be reaping the rewards of this spending and, encouragingly, has identified several new areas for investment in coming years.
Broker Panmure has nudged up its current year forecasts and now predicts underlying pre-tax profits of £885m and EPS of 76p (from £825m and 72.2p in 2010).
| Associated British Food (ABF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,067p | MARKET VALUE: | £8.4bn | |
| TOUCH: | 1,066-1,068p | 12-MONTH HIGH: | 1,096p | LOW: 790p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 669p* | NET DEBT: | 14% | |
| Year to 18 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 6.0 | 419 | 38.1 | 18.8 |
| 2007 | 6.8 | 508 | 46.7 | 19.5 |
| 2008 | 8.2 | 527 | 45.2 | 20.3 |
| 2009 | 9.3 | 495 | 45.5 | 21.0 |
| 2010 | 10.2 | 763 | 69.3 | 23.8 |
| % change | +10 | +54 | +52 | +13 |
Ex-div: 8 Dec Payment: 14 Jan *Includes intangible assets of £1.93bn, or 243p a share | ||||
