(Alliance News) - Associated British Foods on Tuesday awarded shareholders with a dividend, as it regained confidence after the stores of discount fashion retailer Primark reopened last week and became cash generative again.
The FTSE 100-listed food processing and retailing company declared a 6.2 pence per share payout for the 24 weeks to February 27, after not paying any dividends for its previous financial year due to the coronavirus pandemic. Its decision on its final dividend will be determined by trading during the second half of the year, it added.
Shares in AB Foods were down 2.3% at 2,403.64p in London on Tuesday.
AB Foods reported an 8% decline in pretax profit for the first half of its financial year to GBP275 million, while revenue fell by 17% to GBP6.31 billion year-on-year. On a constant currency basis, revenue was 18% lower that the previous year.
The Retail division reported interim revenue of GBP2.23 billion, down 40% from GBP3.71 billion a year before. This is in line with its expectations of GBP2.2 billion, as a result of the majority of Primark stores being closed during November and from the end of December.
Elsewhere, AB Foods' Sugar arm continued to deliver a "much-improved" performance in the first half of financial 2021, driven by Illovo, though revenue was down 5%, the company said.
Grocery revenue in the first half was up 9% year-on-year due to a "strong" result through a combination of successful new product launches and increased volumes through retail sales channels, it said.
Revenue for AB Agri was up 8% and adjusted operating profit was up 19%. Ingredients revenue was in line with the previous year's figure and adjusted operating profit was up 26%.
"Our food businesses delivered an exceptional increase in adjusted operating profit of 30% and we have provided safe and nutritious food under the most demanding of conditions. Primark sales after store re-openings demonstrate the relevance and appeal of our value-for-money offering. We are excited about welcoming customers back into our stores as the lockdowns ease and are delighted with record sales in England and Wales in the week after reopening on April 12. With our success in a number of new markets, as wide-ranging as Poland and Florida, we are as convinced as we have ever been in the long-term growth prospects for Primark," said Chief Executive George Weston.
Looking forward, AB Foods said, following the "exceptional" performance of its Grocery, Sugar, Agriculture and Ingredients businesses in the first half, it expects a softer performance in the second half. It noted it continues to expect Primark profit to be somewhat lower than last year.
"With the reopening of stores in England and Wales last week, and expected re-openings in some markets over the coming weeks, we will be trading at the end of April from 68% of our retail selling space, which increases to 79% if stores with restricted trading are included," the company noted.
AB Foods added that it will increase its retail selling space with an additional nine stores opening in the second half of the year.
The company also said it will repay the GBP121 million in furlough money it claimed under the UK government's job retention schemes to support Primark's 65,000 workforce.
By Zoe Wickens; zoewickens@alliancenews.com
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AB Foods (ABF)