Primark owner ABF raises dividend as markets ‘return to normality’
Primark owner Associated British Food (ABF) has raised its dividend following a strong set of results, thanks in part to a Rita Ora-driven campaign.
The retail and food giant’s board revealed operating profit grew 39 per cent over the period to £911m, helped by a “return to normality” in markets such as sugar and its grocery arm which makes brands such as Blue Dragon, Ryvita, Jordans, Kingsmill and Twinings.
Sales at Primark rose 7.5 per cent, slightly below the 7.9 per cent increase the company reported in the 16 weeks to January.
ABF blamed a slow start for many cold weather categories due to unseasonal warm weather.
The FTSE 100 firm said revenue still increased six per cent to £4.5bn, and operating profit at Primark grew 45 per cent to £508m.
This was driven by demand for women’s clothing with the store helped by its collaboration with pop star Rita Ora.
ABF is targeting 530 Primark stores by the end of 2026 and said it has visibility for continued footprint expansion beyond this goal.
George Weston, chief executive of Associated British Foods, said: “This is a very strong set of financial results, as we are now benefitting from the restoration of some normality in our markets and in our supply chains.
“Improvements to the group’s operational performance, driven by the investments and strong execution over the last few years, are now becoming visible. Group profit margins are recovering accordingly to more normal levels.
He added: “Looking ahead, we continue to invest with discipline to build further sustainable growth. Geopolitical risks remain, of course, and the consumer has yet to fully emerge from cost of living pressures. But the Group is well positioned to deliver good returns to shareholders.”
Following this performance the brand has raised its dividend to 20.7p per share up from 14.2p per share in the exact same period the year before.
Shares in the owner of Primark are up by nearly a fifth in the past year. They have risen close to nine per cent in early trade.
Julie Palmer, Partner at Begbies Traynor, said: “Primark owner Associated British Foods is in rude health, with tangible evidence from the conglomerate’s half year results today that it is in pole position to benefit from improving budgets as the cost-of-living crisis eases further.
“It is critical for any consumer goods giant to get its pricing right and Associated British Foods has shown that it has struck the right balance.”
She added: “With its retail division, in particular, now reaping the rewards of judicious hikes, the Group has posted a rise in profits that would have been unthinkable even a few months ago, a feat all the more impressive given the impact of poor weather.”