Associated British Foods PLC (LSE:ABF) said it expects “significant progress” in group adjusted operating profit and adjusted earnings per share over the coming months as Primark rebounds strongly.
The fast-fashion retailer is estimated to claw back at least the estimated £2bn of sales lost due to store closures last financial year, unless more COVID-19 restrictions are imposed again.
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Primark will continue to expand its selling space next year, especially in two key markets, Italy and Spain.
The division is forecast to see a sharp improvement in adjusted operating margin, recovering to above 10%.
The FTSE 100 firm said that it’s not immune to supply chain, raw material cost and labour rate inflation, but their impact should be helped by the transaction currency gain arising from the weaker US dollar, improved store labour efficiency and lower operating costs.
Higher energy, logistics and commodities costs will be dealt with savings and, if not necessary, the food businesses will implement price increases.
In 53 weeks ended 18 September, group revenue was flat at £13.8bn, while adjusted profit before tax dipped 1% to £908mln.
AB Foods announced a final dividend of 20.5p per share and a special dividend of 13.8p per share after recording a £1.9bn net cash position before lease liabilities.
“Given the strength of our balance sheet and our confidence in the future we are setting out today a new capital cash allocation policy that provides the group with the capital it needs both for investment and financial stability while allowing for enhanced returns to shareholders when appropriate,” said chief executive George Weston (TSX:WN).