Despite giving a very detailed trading update as recently as mid-September, Associated British Foods, the owner of Primark, still managed to surprise on the upside with its full-year results.
The international food, ingredients and retail group, which operates in 46 countries, said revenues went up 9% to £11.1bn. The market has pencilled in a figure of £10.96bn.
Underlying pre-profits were up 1% to £835m and basic earnings per share down 1% to 68.7p in the year to the middle of September. The market consensus was for profit before tax of £802.2m.
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Primark saw profits fall 8% as the low cost retailer absorbed increasing cotton prices as well as the hike in valued added tax (VAT) in the UK.
The company also proposed a final dividend of 16.85p; together with the interim dividend of 7.9p this would mean an increase of 4% on the year before.
AB Foods said its commodity costs appeared to be subsiding, although the effect of forward purchasing means that the benefit to the group would not be felt immediately and, in the case of Primark, not until the beginning of the new calendar year.
Improved sugar pricing is expected to benefit AB Sugar in the coming year and we have made a good start to this year's production campaigns in the northern hemisphere, it said.
Going forward the firm also hopes to benefit from the returns on recently completed capital investments.
"Opportunities for further investment are exciting, particularly in Primark, and the strength of the group balance sheet and a strong cash flow will enable us to pursue them with confidence," said chief executive, George Weston.
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