After posting robust annual results, Twinings and Patak’s owner Associated British Foods (ABF) today (7) forecasted a more stable 2023-24 performance from its food manufacturing business.
Over the year to Sept 16, revenues in its grocery division were up 11 per cent on a constant currency basis to £4.2 billion, driven primarily by price increases through the course of the year to mitigate cost inflation. Despite the inflation volatility, adjusted operating profit margin held at 10.7 per cent, helped in part by a recovery in its Allied Bakeries business. Adjusted operating profit for the year was 8 per cent higher at £448m, stated recent reports.
In the first half of the year, revenues were 10 per cent higher than the same period a year ago. In the second half, revenues were 12 per cent higher. The group noted that the difference in the growth rates predominantly reflects the lag between the input cost inflation of the prior year and the first half of this financial year and the time taken to implement pricing.
ABF stated that as this year progressed, inflation pressures started to ease. Adjusted operating profit in the first half was £173m, down 10 per cent on the same period a year ago. However, in the second half adjusted operating profit increased by 23 per cent to £275m as the effect of pricing came through.
Looking ahead, ABF said it expected “stability” across its grocery division as inflation recedes and it steps up investment in marketing.
George Weston, Chief Executive of ABF, commented, “At the outset of this financial year the Group was facing very significant economic challenges caused in part by major geo-political events. Looking back on the year, it is clear to me that the Group performed extremely well and is as a result now well positioned for the year ahead.
"Trading at Primark was excellent under the circumstances. At the beginning of the year we implemented selective price increases partially to protect profitability, on the grounds that the significant input cost inflation was temporary. That careful pricing delivered as intended, with customers continuing to shop with us enthusiastically.
"Profitability in our food businesses moved ahead as a result of the appeal of our products and the strength of our brands, both of which supported us in the recovery of high levels of input cost inflation without disrupting our customer relationships.
'Our food businesses are also in very good shape, and our Sugar business especially should see much better profitability in the year ahead.”
