AB Foods earnings fall 40 per cent on Primark’s Covid-19 hit

Primark’s profit plunged to £362m from £969m as pandemic measures shuttered stores

Primark on Oxford Street. Photograph: Yui Mok/PA Wire

Primark on Oxford Street. Photograph: Yui Mok/PA Wire

 

Associated British Foods on Tuesday reported a 40 per cent fall in full-year earnings, with a Covid-19 related hit to profit at its Primark clothing business outweighing increases at its sugar, grocery, agriculture and ingredients divisions.

The group’s adjusted earnings per share were 81.1 pence in the year to Sept. 12, down from 137.5 pence reported for the 2018-19 year. ABF said it would not pay a final dividend.

Prof it at Primark, which trades as Penneys in Ireland, plunged to £362 million from £969 million, reflecting the closure of its stores across Europe during a first wave of coronavirus lockdowns and the impact of the virus on customer demand.

Trading was strong after the stores reopened. But the group warned on Monday a second wave of lockdowns would dent sales by £375 million. Primark does not have an online business.

The group expects Primark’s full year 2020-21 sales and profit to be higher than 2019-20 despite the latest Covid-19 restrictions. It forecast a sales decline in the first half but higher sales in the second half.

The group said it will continue to expand retail selling space.

First-half profit at AB Foods’ grocery division, whose brands include Kingsmill bread, Twinings tea, Ovaltine and Jordans cereal, rose to £437 million from £381 million.

Sugar profit increased to £100 million from £30 million and ABF forecast further improvement in the current year.

The group said it had completed all practical preparations for the end of Britain’s Brexit transition period with the European Union on December 31st.

“Contingency plans are in place should our businesses experience some disruption at that time,” it said.

Shares in AB Foods, majority owned by the family of CEO George Weston, were down 1.7 per cent at 0809 GMT, extending losses this year to 35 per cent. – Reuters