Dow Jones Newswires: Primark owner AB Foods posts profit drop

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Associated British Foods PLC said Tuesday that pretax profit fell 8.3% in fiscal 2019, despite strong performance at Primark and its grocery business.

For the year ending Sept. 14, the U.K. retailer ABF, -0.04%  said pretax profit was 1.17 billion pounds ($1.51 billion)O, compared with GBP1.28 billion in fiscal 2018. Adjusted operating profit — the company’s preferred metric which excludes exceptional costs — was GBP1.42 billion, up 1% from the prior year, the company said.

Revenue for the year rose 1.6% to GBP15.82 billion, it said.

The board declared a final dividend of 34.3 pence a share, which together with the interim dividend brought the full year payout to 46.35 pence, an increase of 3%, the company said.

Adjusted operating profit at its sugar segment fell 79% at actual foreign exchange rates to GBP26 million, while its grocery segment rose to GBP380 million from GBP335 million on the same metric this time last year.

Meanwhile, retail adjusted operating profit was GBP913 million, up from GBP834 million in fiscal 2018, with Primark sales up 4.2% ahead of last year at actual exchange rates.

The company said that AB Sugar will benefit materially from the increase seen this year in EU sugar prices and from further cost reduction. AB Foods said that Primark will continue to expand its selling space next year, especially in France and Spain. It said it expects cost reductions in both goods and overheads during the year, but added that the weakness of sterling during this financial year will result in a margin decline for Primark in the first half.

“Next year the group is well-positioned for further progress, with the continued expansion of Primark, a material improvement in our sugar profit and strong profit growth in grocery,” Chief Executive George Weston said.

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