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Associated British Foods scraps dividend as stock writedown hits profits

By BFN News | 07:43 AM | Tuesday 21 April, 2020

Primark-owner Associated British Foods scrapped its interim dividend after a write down pn the value of its inventory due Covid-19 lockdowns dented its profits. For 24 weeks ended 29 February, pre-tax profit fell 41% to £298m on-year, even as revenue rose 2% to £7.6bn. Grocery achieved 'excellent' profit and margin growth, sugar was on track to deliver a 'material' improvement in profit for the full year and budget clothing retailer Primark profit was ahead of our expectations, the company said. AB Sugar revenue was 8% ahead of last year in the first half due to higher EU sugar prices and increased export sales at Illovo, more than offsetting a decline in sales volumes in Spain. Sales at Primark were 3.9% ahead of last year at constant currency and 2.2% ahead at actual exchange rates, driven by increased retail selling space partially offset by a 0.5% decline in like-for-like sales. With the smaller than expected decline in margin, operating profit was only 'marginally down on last year on an IFRS 16 pro forma basis at constant currency,' ABF added. Looking ahead, the company said its expectation for the aggregate operating result for its sugar, grocery, ingredients and agriculture businesses in the second half was unchanged. 'We have good visibility that we will be able to mitigate half of the operating costs of the Primark business while the stores remain closed,' ABF said. 'The timing of the reopening of the stores however remains uncertain; moreover, the process of reopening, once it begins, is likely to be complex.' 'As a result, it is too early to provide earnings guidance for the remainder of the current financial year.' Story provided by

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