AB Foods, a British conglomerate, has announced plans to provide additional returns to shareholders following a boost in its fiscal 2023 profit. The company also expects a significant recovery in the margins of its fashion retailer Primark, thanks to a decrease in costs.
Share Buyback Program
AB Foods aims to repurchase £500 million ($617.1 million) worth of shares over the next year, building upon its previously completed buyback program of £500 million in October.
Primark’s Impressive Performance
Primark, the fashion retailer owned by AB Foods, reported a rise in revenue for the year ending September 16. The revenue reached £9.0 billion, surpassing the board’s expectations and outpacing the £7.70 billion from the previous year. This increase was attributed to selective pricing and well-received product ranges.
However, Primark’s adjusted operating profit fell by 3% to £735 million, with a margin of 8.2% compared to the previous year’s 9.8%. These declines were a result of pricing factors, according to the company.
Recovery and Future Outlook
Looking ahead, AB Foods anticipates a substantial recovery in Primark’s adjusted operating profit margin due to decreases in material and freight costs. The company estimates that the adjusted operating profit margin will exceed 10%, with further improvements depending on consumer demand. AB Foods also commented that while the consumer environment remains challenging, inflationary pressures have eased and volatility has decreased compared to twelve months ago.
Strong Financial Performance for AB Foods
AB Foods’ group adjusted pretax profit increased by 9% to £1.47 billion. The group’s adjusted operating profit reached £1.51 billion, exceeding the board’s expectations and slightly surpassing last year’s figure of £1.435 billion.
Furthermore, the company’s total group revenue rose to £19.75 billion from £17.0 billion, mainly driven by higher sales facilitated by pricing actions. However, this increase fell short of market expectations of £20.05 billion, based on estimates from 18 analysts sourced from FactSet.
AB Foods’ board of directors declared a total dividend of 60.0 pence per share, reflecting an increase compared to the previous dividend of 43.7 pence.