(Alliance News) - Associated British Foods PLC on Tuesday opted against a final dividend as its Primark business braced for further closures and profit dropped sharply during the pandemic.
AB Foods said group revenue fell 12% in the year ended September 12 to GBP13.94 billion from USD15.82 billion. Revenue was below market consensus of GBP14.40 billion. Pretax profit plunged 42% to GBP686 million from GBP1.17 billion during a year hit by Covid-19 lockdowns.
Primark revenue alone was 24% lower at GBP5.90 billion, AB Foods noted, adding that UK like-for-like sales are 12% lower since reopening from the Spring Covid-19 lockdown.
Faring better, Grocery revenue was 0.9% higher, and the Agriculture arm saw a 0.7% rise. However, Sugar revenue was down 0.9%, and Ingredients revenue inched 0.1% lower.
Having already opted against an interim payout, the company decided against paying a final dividend as well. London-based AB Foods paid a 46.35 pence per share dividend in financial 2019.
"The increasing restrictions in a number of Primark's major markets, lead us to be cautious. On balance, we have elected not to propose a final dividend for the year whilst we monitor the impact of further Covid-19 restrictions on Primark during this important trading season," AB Foods explained.
On Monday, the company estimated a GBP375 million loss of sales as a result of Primark stores being forced to close again in England and the rest of Europe.
All Primark stores are temporarily closed in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia - accounting for 19% of the FTSE 100-listed company's total retail selling space.
With the UK government intending to close non-essential stores in England for one month starting Thursday this week and ending December 2, that would mean that 57% of the company's total selling space would be temporarily closed from Thursday, with 156 Primark stores trading and 231 stores not trading. UK MPs will vote on the English lockdown on Wednesday.
Outlook-wise, AB Foods said Tuesday: "Notwithstanding the currently announced periods of restriction, we expect Primark full year sales and profit to be higher next year. There will be a sales decline in the first half compared to last year but higher sales in the second half," AB Foods guided.
Chief Executive George Weston commented: "Following a three-month closure, Primark delivered a robust performance, receiving an overwhelmingly positive response when it safely welcomed customers back to its stores. Uncertainty about temporary store closures in the short-term remains, but sales since reopening to the year end of GBP2 billion demonstrate the relevance and appeal of our value-for-money offering.
"We have the people and the cash resources to meet the challenges ahead and we are investing for the future."
Shares in AB Foods were down 1.0% at 1,704.14p in London on Tuesday morning.
By Anna Farley; annafarley@alliancenews.com
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AB Foods (ABF)