Associated British Foods (LON: ABF) (OTCPK: ASBFY) is up 6% in London this morning on the annual results. Those are good but not startlingly so - they’re managing to keep revenues ahead of inflation which is good in current conditions. ABF shares are up both on the results and also the increase in the dividend - there’s a minor and special dividend to be added to the final.
For those who don’t know the business line: “Associated British Foods plc operates as a diversified food, ingredients, and retail company worldwide. It operates through five segments: Grocery, Sugar, Agriculture, Ingredients, and Retail. The Grocery segment manufactures and sells grocery products, including hot beverages, sugar and sweeteners, vegetable oils, balsamic vinegars, bread and baked goods, cereals, ethnic foods, and meat products to retail, wholesale, and foodservice businesses. The Sugar segment is involved in growing, processing, and selling sugar beet and sugar cane to industrial users. The Agriculture segment manufactures and sells animal feeds; and provides other products and services for the agriculture sector.” The sugar sector is British Sugar - largely the beet sugar business in the UK. The retail sector is largely Primark.
The spread of businesses means that we’d perhaps not expect stellar performance - a rise in one sector might well be offset by more challenging conditions in another. On the other hand we’d also not expect a disaster for the company as a whole.
Associated British Foods share price from Google Finance
The results: “The Group performed very well in the financial year despite significant inflationary and other macro-economic pressures. Group revenue increased to £19.8bn, 16% higher than the previous year at actual exchange rates and 15% higher at constant currency. This increase in revenue was largely due to price increases across our businesses to mitigate high levels of inflation. As the financial year progressed, we saw the rate of inflation ease. Adjusted operating profit rose to £1,513m, 5% higher at actual exchange rates and 4% at constant currency.”
Remember, as we always need to, that corporate numbers are not adjusted for inflation. So, Revenues were up in real terms, profits were around and about level in real terms. This is not a stunning performance but it is a creditable one.
There is also that special dividend: “Further to the announcement released earlier today by Associated British Foods plc (the 'Company') of its final results for the year ended 16 September 2023, the Company confirms that: a final dividend of 33.1 pence per share will be paid; and in addition to the final dividend, a special dividend of 12.7 pence per share will be paid as a second interim dividend.”
There’s nothing stunning here but a creditable outperformance. Thus the muted response, that 6% up.