Associated British Foods (ABF) H2 2024 earnings summary

Executive summary

• Operating profit increased by 38% year-over-year, with adjusted EPS up 39% and cash generation reaching £1.4 billion, a £1.1 billion increase from last year.

• Both Retail and Food businesses delivered robust performance, supported by consistent multi-year investment and a return to more normal market and supply chain conditions.

• Significant investments of £1.3 billion were made, supporting future growth, ESG priorities, and digital initiatives.

• Over two years, £2.3 billion was returned to shareholders via dividends and buybacks, with total dividend per share up 50% to 90.0p including a special dividend.

• Focused investments in sustainability, digital, and product initiatives contributed to growth and margin recovery.

Financial highlights

• Group revenue rose 4% year-over-year to £20.1 billion at constant currency.

• Adjusted operating profit increased 38% to £1,998 million; adjusted EPS up 39% to 196.9p.

• Free cash inflow was £1,355 million, strengthening the balance sheet and reducing leverage to 0.7x.

• Group margin improved from 7.7% to 10%; Primark margin recovered to 11.7%.

• Basic EPS up 44% year-over-year, benefiting from lower share count.

Outlook and guidance

• Primark targets mid-single digit sales growth in 2025, with margins broadly stable.

• Sugar profits expected to drop to £50m–£75m in 2025 before rebounding in 2026 as beet prices decline and supply/demand rebalances.

• Grocery margins to normalize in the U.S., with progress expected elsewhere.

• Ingredients anticipates growth in yeast and bakery ingredients and recovery in specialty ingredients.

• Continued investment in business and shareholder returns prioritized.