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(Alliance News) - Associated British Foods said Tuesday it delivered a resilient annual performance, with its Primark fast-fashion store chain holding up well against pressures from the Covid-19 pandemic, and in the mood to expand.
For the 53 weeks that ended on September 18, revenue was GBP13.88 billion, down slightly from GBP13.94 billion in financial 2020, but pretax profit rose by 6% to GBP725 million from GBP686 million.
AB Foods posted adjusted operating profit of GBP1.01 billion, down 1% from GBP1.02 billion last year. Operating profit of GBP808 million was in line with GBP810 million the year before.
Its Retail unit, which houses the Primark fashion chain, delivered adjusted operating profit of GBP415 million, up 15% from GBP362 million in financial 2020. It said Primark's profit margin was 10.6% in the second half.
However, AB Foods said sales at Primark, including a 53rd week this financial year, were 5% below last year at both actual and constant currency exchange rates and down 12% on pre-pandemic level due to Covid-19 restrictions.
AB Foods said it will press ahead with its Primark expansion in growth markets. In the US it will open a store on Jamaica Avenue, Queens, and it has signed four further leases to expand its reach in the greater New York area, as well as a lease for a store in Tyson's Corner, near Washington DC.
AB Foods declared a 20.5 pence final dividend, alongside a 13.8p special dividend, bringing total dividends for the year to 40.5p.
"Given the strength of our balance sheet and our confidence in the future we are setting out today a new capital cash allocation policy that provides the group with the capital it needs both for investment and financial stability while allowing for enhanced returns to shareholders when appropriate. We are announcing a special dividend for shareholders today as a result," said Chief Executive Officer George Weston.
Weston added: "Although the possibility of further trading restrictions cannot be ruled out, we expect Primark to deliver a much improved margin and profit next year. We are now intent on expanding our new store pipeline and investing in technology and digital capabilities to continue improving the performance of the business."
AB Foods shares were up 6.1%, outperforming the wider FTSE 100.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: marginally higher, up 0.24 point at 7,300.64
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Hang Seng: up 0.2% at 24,812.64
Nikkei 225: closed down 0.8% at 29,285.46
DJIA: closed up 104.27 points, 0.3%, at 36,432.22
S&P 500: closed up 0.1% at 4,701.70
Nasdaq Composite: closed up 0.1% at 15,982.36
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EUR: firm at USD1.1595 (USD1.1590)
GBP: up at USD1.3570 (USD1.3558)
USD: down at JPY112.85 (JPY113.18)
Gold: down at USD1,822.17 per ounce (USD1,823.51)
Oil (Brent): down at USD83.35 a barrel (USD83.60)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
1100 CET Germany ZEW indicator of economic sentiment
0830 EST US producer price index
0855 EST US Johnson Redbook retail sales index
1630 EST US API weekly statistical bulletin
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UK Prime Minister Boris Johnson is under increasing pressure after a minister admitted the government made a "mistake" by attempting to change standards rules to prevent a Tory MP from being suspended. Johnson skipped an emergency Commons debate on Parliament's standards system, leaving it to the Chancellor of the Duchy of Lancaster to respond for the government as the prime minister chose to instead honour a "long-standing" commitment to visit a North East hospital. Steve Barclay told members of Parliament that, while there were concerns with the way allegations of wrongdoing by MPs are probed, it had been an error for ministers to proceed in the way they did last week as they sought to rip up the current rules. The fiery debate also saw former chief whip Mark Harper call on Johnson to apologise for his handling of the sleaze row which has engulfed the Conservative Party over the past week, with more recently elected Tories expressing their dissatisfaction with Downing Street's attitude.
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German exports fell for the second month in a row in September as Europe's top economy grapples with global supply shortages. Germany exported EUR112.3 billion worth of goods in September, adjusted for the season – a 0.7% drop from the previous month, according to federal statistics agency Destatis. Imports rose by 0.1% to EUR99.2 billion. The August drop in exports was the first since April 2020, when the first wave of the coronavirus pandemic stifled the global economy. The upheaval caused by Covid-19 has given rise to global shortages in components, such as semiconductors, timber and plastics, limiting production in key sectors for the German economy such as the car industry.
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BROKER RATING CHANGES
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CITIGROUP REINITIATES PRUDENTIAL WITH 'BUY' - PRICE TARGET 1,879 PENCE
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BERENBERG RAISES BT TO 'BUY' (HOLD) - PRICE TARGET 200 (175) PENCE
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JPMORGAN CUTS CLARKSON TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 4,302 (4,295) PENCE
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COMPANIES - FTSE 100
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Irish support services firm DCC said it delivered a strong performance in the first half with all divisions delivering growth, despite the global volatility in commodity pricing, supply chains and inflation. For the six months to September 30, revenue rose 27% to GBP7.52 billion from GBP5.93 billion last year and adjusted operating profit increased 11% to GBP195.8 million from GBP176.1 million. DCC declared an interim dividend of 55.85p, up 7.5% from 51.95p paid last year. Looking ahead, DCC said it expect that the year ending March 31, 2022 to be another year of "strong operating profit growth and continued development activity" and in line with current market consensus expectations.
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Housebuilder Persimmon said it continued to perform well through the period against a backdrop of healthy demand, with private sales reservation rates per site remaining ahead of 2019, as sales followed a more normal seasonal pattern as expected when compared to 2020. For the period July 1 to Monday, average private new home sales reservation rate per site was 16% ahead of the same period in 2019. Persimmon said demand for newly built homes continues to underpin positive pricing conditions in the housing market. "With GBP1.15 billion of forward sales reserved beyond the current year and a quality pipeline of new developments coming on stream, Persimmon has a robust platform to support its continued high quality growth and the delivery of superior long-term sustainable returns for the benefit of all stakeholders," said CEO Dean Finch.
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COMPANIES - FTSE 250
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Direct Line Insurance said gross written premium rose by 0.7% in the third quarter to GBP857.1 million from GBP851.5 million a year before. The motor and home insurer said it continues to expect a combined operating ratio of 90% to 92%, normalised for weather, in 2021, with a medium-term target of 93% to 95%. A ratio below 100% means a profit on underwriting, so the lower the better. "We are...on track to implement the FCA's new pricing practices regulations at the start of next year," said CEO Penny James. "Whilst market pricing in the first few months of 2022 is likely to be volatile as the market resets, our brands, customer focus and diversified business model mean we remain confident."
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COMPANIES - MAIN MARKET AND AIM
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Oxford Nanopore Technologies said it has been awarded a three-year contract worth USD68 million by G42 laboratory in the UAE. The company will provide devices and consumables, including flow cells and kits, and other support services. Oxford Nanopore kept is revenue guidance for its core Life Science Research Tools arm at GBP105 million to GBP111 million in 2021 but set 2022 guidance at GBP135 million to GBP145 million. For 2023, it expects LSRT revenue of GBP170 million to GBP190 million, up from GBP165 million to GBP175 million at the time of its IPO in September.
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COMPANIES - GLOBAL
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Toshiba plans to split into three companies as early as 2023, a newspaper report said, after a series of crises at the Japanese conglomerate, including the ouster of the board's chair and a contentious buyout offer. The Nikkei business daily said the three units would focus on infrastructure, devices and semiconductor memory and are expected to be listed, possibly within two years. Toshiba told AFP the option of splitting its business up was under consideration but said nothing had been decided yet. The Nikkei, which did not cite sources, said the move could be announced Friday when Toshiba reports earnings and unveils a new mid-term business plan.
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Robinhood Markets said it was the victim of a cyber attack that exposed personal data from about 7 million customers. The trading platform experienced a "data security incident" last Wednesday which has since been contained, it said in a statement released after the US market closed on Monday. According to Robinhood, the hackers obtained email addresses of about 5 million customers and "full names for a different group of approximately 5 million people". The company said the hackers accessed further data, including date of birth and zip code of a group of about 310 people, "with a subset of approximately 10 customers having more extensive account details revealed". "Based on our investigation, the attack has been contained and we believe that no Social Security numbers, bank account numbers, or debit card numbers were exposed and that there has been no financial loss to any customers as a result of the incident," Robinhood said.
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Tuesday's Shareholder Meetings
Aberdeen New Thai Investment Trust PLC - GM re combination with AEMC and liquidation
Ironveld PLC - GM
Mid Wynd International Investment Trust PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
