Associated British Foods reported a rise in full year revenue as it expanded the selling space of discount clothing retailer Primark and benefited from the weakening of sterling, though like-for-like sales were lower.
Although LFL sales were 2% negative overall, group revenue for the year ended 17 September of £13.4bn was up 5% compared to last year, or 4% on a constant currency basis.
This resulted in a 3% increase in adjusted operating profit to £1.11bn and a 5% rise in adjusted pre-tax profit to £1.07bn, with adjusted earnings per share up 5% to 106.2p
Thanks to lower exceptional charges, statutory profit before tax was up 47% to £1.04bn and basic earnings per share increased by 55% to 103.4p.
During the year the company invested £1bn, which included an increase in capital expenditure for Primark and the food businesses. The company also spent £247m to buy the minority shareholdings in Illovo Sugar.
Net debt was £315m, although higher than last year, this was after the buyout of the Illovo minorities and a £53m increase due to translating foreign currency denominated net debt to a weaker sterling.
Primark added 1.2m square feet of selling space during the year, with new store openings planned for the 2016/17 financial year.
The company said AB Sugar will benefit from an increase in sugar prices and from reductions in its cost base, while the grocery, ingredients and agriculture businesses are expected to make further progress.
Assuming a continuation of current exchange rates, and following the devaluation of sterling, the company expect earnings to benefit from the translation of overseas profits.
However, Primark buys the majority of its merchandise in dollars and sells in sterling, so the company expects an adverse effect on its UK margins.
“Taking all of these factors into account, at this early stage, we expect progress in adjusted operating profit and adjusted earnings for the group for the coming year.”
Chief executive George Weston said: “This has been a year of progress for all of our businesses with a substantial expansion in Primark’s selling space, increased margins in all of the food businesses and fundamental structural changes at AB Sugar.
“The recent decline in the value of sterling presents both benefits and challenges to the group. The diversity of our operations and our broad geographical footprint, combined with a strong balance sheet, equip us well to take advantage of these opportunities as they arise.”
Since the end of the year the company said it intends to sell ACH’s herbs and spices business in North America with completion expected shortly.
The company declared a final dividend of 26.45p per share to be paid on 13 January with the total for the year 36.75p, a 5% increase.