Strong Delivery in Food as COVID-19 Impacts ABF’s Retail Performance
Associated British Foods, the UK-based diversified international food, ingredients and retail group, with significant businesses in Europe, Africa, the Americas, Asia and Australia, has reported a 30% decline in adjusted operating profit to £1.024 billion on group revenue down 11% to £13.9 billion at constant currency for the year ended 12 September 2020 compared to the previous year.
The reduction in group revenue was mainly seen in the third quarter fuelled by the total loss of sales for the three months period in which ABF’s Primark retail stores were closed as a consequence of the COVID-19 pandemic. The slump in adjusted operating profit was a consequence of this. To date, COVID-19 has cost Primark some £2 billion of sales, £650 million in lost profit and a cash outflow of £800 million, according to ABF.
Statutory operating profit for the year dropped to £810 million from £1.282 billion the previous year, driven by the reduction in adjusted operating profit and an increase in the net exceptional charges to £156 million this time from £79 million last year.
In contrast to Primark, the adjusted operating profit of ABF’s Grocery, Sugar, Agriculture and Ingredients operations combined increased by 26%, with each of these business segments growing their profits.
George Weston (pictured), Chief Executive of Associated British Foods, comments: “I am proud of how our people have responded to the many challenges presented by COVID-19. Throughout, we have provided safe, nutritious food under the most extraordinary conditions, proving the value and resilience of our supply chains. Our food businesses delivered an adjusted operating profit increase of 26%, driven by high demand and improved productivity.
“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 £2 billion demonstrate the relevance and appeal of our value-for-money offering.”
He adds: “We have the people and the cash resources to meet the challenges ahead and we are investing for the future.”
