Associated British Foods (ABF) has announced it is facing “substantial and volatile” input cost inflation, which will hit results in its current financial year.
In the year ended 17 September 2022, the parent company of Kingsmill, Twinings and Jordan’s, reported a 42% increase in operating profit to £1.44 billion, up from £1.01 billion in the same period in 2020/21.
The company also announced a 10% rise in food sales, with adjusted operating profit for sugar, agriculture and ingredients ahead of last year.
Its grocery margin sat at 10.7%, reflecting a lag in pricing to recover input cost inflation, ABF revealed. The group also announced a £500 million share buyback programme and an 8% increase to its total dividend.
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However, shares in the company have fallen 29% this year, as adjusted earnings per share increased by 64% to 131.1p.
“The group delivered strong revenue and profit growth this year in a clear demonstration of the benefits of our diversification, brand strength, and of our commitment to disciplined financing and investment,” ABF CEO George Weston said.
“The performance was achieved despite pandemic-induced disruption being followed by high and volatile input cost inflation.
“Our food businesses continued to play their important role providing safe, nutritious food in an era of supply chain disruption and high inflation. Sales increased by 10% driven by price recovery with adjusted operating profit proving resilient.”
Looking forward, Weston added it expect significant growth in group sales from pricing in food.
“Our outlook remains unchanged. We continue to expect group adjusted operating profit and adjusted earnings per share to be lower than the financial year just closed,” he said.
