AB Foods’ full-year earnings come in 40% lower due to COVID-19 restrictions

Written by: Wajeeh Khan
November 3, 2020
  • AB Foods’ full-year earnings come in 40% lower due to COVID-19 restrictions.
  • The British multinational refrains from declaring a final dividend on Tuesday.
  • The food processing company sees higher profit from grocery and sugar units.

In a report on Tuesday, Associated British Foods plc (LON: ABF) said that its full-year earnings came in 40% lower than last year as its clothing business, Primark, remained under pressure in recent months due to the Coronavirus pandemic.

Shares of the company tanked more than 1% on market open on Tuesday. On a year to date basis, Associated British Foods is now over 35% down in the stock market. Confused about choosing a reliable stockbroker to trade online? Here’s a list of the top few to make selection easier for you.

AB Foods refrains from declaring a final dividend

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Associated British Foods earned 81.1 pence per share on an adjusted basis in the year that concluded on 12th September, versus a much higher 137.5 pence per share in the previous fiscal year. The company’s board did not declare a final dividend on Tuesday.

At £362 million, profit from Primark came in sharply lower than £969 million last year. The British company said that sales recovered in recent months as the government eased COVID-19 restrictions. But the second wave of the novel flu-like virus that is pushing stores back into closure could result in a £375 million hit to sales.

Primark is yet to establish its online business. For fiscal 2021, the Irish fashion retailer expects better sales and profit as compared to fiscal 2020. It forecasts sales to take a hit in the first half due to the new COVID-19 restrictions, but expresses confidence that sales will recover sharply in the second half.

In July, Primark rejected the British government’s bonus for calling furloughed employees back to work.

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AB Foods’ profit from grocery and sugar segments

Profit from AB Foods’ grocery segments in the fiscal first half, stood at £437 million versus a lower £381 million in the same period last year. Sugar profit also jumped from £30 million to £100 million.

In separate news from the United Kingdom, DS Smith said on Monday that it was still too soon to consider reinstating dividend payments. The cardboard maker saw a £15 million hit to its annual profit due to the ongoing health crisis.

AB Foods performed fairly upbeat in the stock market last year with an annual gain of about 20%. At the time of writing, the British multinational food processing and retailing company is valued at £13.43 billion and has a price to earnings ratio of 18.97.