Coronavirus Update

Associated British Foods Plc - Interim Results Announcement February 2020

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Associated British Foods plc

Interim Results Announcement

24 weeks ended 29 February 2020

A PERSONAL MESSAGE FROM THE CHIEF EXECUTIVE

Today, Associated British Foods is announcing its financial results for the first half. However, before we turn to the details of those results, I'd like to set out some personal reflections on how our group is responding to this unprecedented pandemic.

Two of our employees, Mario Marioli who worked for forty years in our Italian yeast plant, and Claudio Maini who worked at Acetum for twenty years, have lost their lives to COVID-19 in the last three weeks, and we have another employee currently in intensive care in the USA. One of our ABF head office colleagues lost her partner to the disease last week. Many of us have vulnerable relatives and friends we must protect and I am sure we all know people working under huge stress in the NHS and in health and care services around the world.

Much as I would love to be allowed to reopen Primark stores across the UK, Continental Europe and the USA soon, because lockdown has so harmed our business and our supply chains, I know that we must not do so until we have suppressed this disease. And when we are allowed to reopen we must make our Primark stores safe for our staff and our customers, even if that means ensuring there are fewer people shopping at any one time and so accepting lower sales at least until the remaining risk is minimal. In time we can rebuild the profits. We can't replace the people we lose.

ABF has been squarely in the path of this pandemic. At Primark we have 68,000 of our people receiving furlough payments from governments across Europe, without which we would have been forced to make most redundant. From making sales of £650m each month, since the last of our stores closed on 22 March, we have sold nothing. One of the world's great clothing retailers is entirely shut. We have paid for in full, and taken delivery of, very large amounts of completed stock which we can't sell for now and we have established a fund that will ensure everyone in a vulnerable country who worked on a Primark garment, whether completed or not, is paid for that work. And we are supporting suppliers with commitments to buy garments that are as yet unfinished. But not until shops reopen and we can place new orders, will the economic hardship that COVID-19 has caused to all those in our supply chain begin to reduce.

I am in awe of the Primark teams for their care, good judgement and immense hard work as they have managed this crisis.

Our food businesses, and in particular our food factories and depots and drivers, have equally been put under intense pressure since this pandemic began, but in very different ways. ABF businesses produce more food in the UK than any other organisation and we are significant producers of food in other countries too. It has been essential that they all keep fully running. Indeed, during the weeks of panic buying, they had to produce more than ever before. They have had to do so whilst reconfiguring factory layouts to ensure safe working for our staff, whilst suffering inevitably from higher than normal absence and whilst often being isolated from outside sources of technical support. The willingness of thousands of our people to come to work whilst so many of the rest of us sit this disease out safely at home has been humbling; and the ingenuity, hard work and leadership of dozens and dozens of frontline managers has been amazing. Our factories are full of people who know how vital their work is and who are skilled and committed. Our success in keeping the nation fed is testament to the robustness of the modern food chain; it is also testament to the reality that you don't need to tell most people how to behave well, you just need to allow them to do so; and it is the finest thing I have seen in a career in business.

ASSOCIATED BRITISH FOODS PLC RESULTS FOR THE 24 WEEKS ENDED 29 FEBRUARY 2020

Encouraging first half results

Resourced to respond to the challenges of COVID-19

 

 

2019 IFRS 16

pro forma

2019 IFRS 16

pro forma

2019

as reported

 

 

Actual currency

Constant currency

Actual currency

 Group revenue

£7,646m

+2%

+3%

+2%

 Adjusted operating profit

£682m

+2%

+3%

+7%

 Adjusted profit before tax

£636m

+3%

 

+1%

 Adjusted earnings per share

61.8p

+3%

 

+1%

 Dividend per share

nil

 

 

 

 Gross investment

£363m

 

 

 

 Net cash (before lease liabilities)

£801m

 

 

 

 Net debt (including lease liabilities)

£2,751m

 

 

 

 Statutory operating profit

£349m

-38%

 

-35%

 Statutory profit before tax

£298m

-41%

 

-42%

 Basic earnings per share

27.5p

-43%

 

-44%

Statutory operating profit is stated after exceptional charges of £309m. We have carefully reviewed the inventory on hand at Primark and, to reflect an expected lower net realisable value on some inventory when our stores reopen, this charge includes a £284m provision.

George Western, Cheif Exec Said: 

"The group delivered an encouraging trading performance in the first half. The rapid spread of COVID-19 has impacted all of our lives and the human tragedy that continues to unfold has shocked and saddened us all. We are a strong, diversified and resilient group. Our people are working hard to maintain supply from our food businesses. Primark is managing through an extraordinarily challenging period after all of its stores closed in March and our management response to mitigate the cash outflows was swift and proportionate. Although uncertainty remains, we have the people and the cash resources to meet the challenges ahead."