Profits were up across the board at Associated British Foods for the first half of the year – but currency woes have hurt top line growth.
Group revenue for the Weston-owned business stood at £6.12bn over the 24 weeks to 27 February, down two per cent on an actual basis or up two per cent at constant currency.
Adjusted operating profit was up three per cent to £486m, although adjusted pre-tax profits were down four per cent to £466m.
The group, which owns Primark, is increasing dividend per share by three per cent to 10.3p. ABF's share price was up 2.4 per cent in early trading, making it one of the best performers on the FTSE 100 this morning.
Operating profit climbed 35 per cent to £477m, while pre-tax profit was up 115 per cent to £457m. Basic earnings per share soared 150 per cent to 45.2p.
Why it's interesting
ABF is claiming these figures as a sign of underlying progress across all the businesses, with its struggling sugar division reporting a "better result, albeit still at a low level". Grocery and agriculture both saw profit margins improve, while profits were "well ahead" in ingredients. And Primark, the jewel in the crown, continued to grow strongly.
However, as previously warned, exchange rates held group profits back, both in the translation of overseas revenues and profits "and, significantly, in the transaction effect on the margin at Primark and British Sugar".
ABF is not the only business to be hit by currency headwinds. Mothercare's turnaround has been blown off track by similar issues, as have many other retailers and brands from a wide range throughout the sector, including Asos and Burberry.
ABF has not changed its outlook for the full year, with a weakening sterling giving rise to hope that currency issues may improve in the second half "and we would no longer expect currency translation to have a material impact on our results for the full year".
The group said it now expected "only a marginal decline in adjusted earnings per share for the group for the full year".
What ABF said
ABF chief executive George Weston said: “These results demonstrate underlying progress for all of our businesses in the period despite currency.
"Good buying and selling space expansion continued at Primark, cost reduction and performance improvements contributed to a better result at sugar, profits were well ahead at ingredients, and profit margins improved at grocery and agriculture.”
A much-anticipated return to growth in sugar and resilience in other divisions mean ABF stands to become less dependent on Primark.