Three things you need to know as the UK financial markets open, from Tony Cross.
#1. Surge in Primark profits buoys ABF
Associated British Foods LON:ABF issued full year results this morning with group revenues up 2% but a dramatic 32% increase in operating profits. Growth in sales and margin recovery at Primark were both noted, whilst the food business also fared well with falling input costs providing further support. Total dividends are increasing again by a further 50% to 90p per share and management have also initiated another share buy-back round of £500m.
#2. Sales, margins fall again at ASOS but has a turning point been reached?
More rationalisation has been seen at ASOS LON:ASC with group revenues down a further 16% but margins continue to contract, too. That’s driving further operating losses although there may be some solace in the fact that full year EBITDA came in at the top end of consensus estimates. The running down of stock is now seen as complete and the balance sheet has been strengthened, giving management the confidence to anticipate a 300bps improvement in gross margins for FY25, along with a 60% improvement in adjusted EBITDA.
#3. Full year guidance reiterated at Weir
Scottish engineering group Weir LON:WEIR issued Q3 numbers today, noting positive order development and reiterating full year guidance. Management notes that decarbonisation trends, underlying GDP growth and the demand to transition to sustainable mining all play very much to the company’s agenda. Cost savings initiatives to recover as much as £60m by 2026 also remain on track.
