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Investors advised to ‘hold’ Associated British Foods despite an increase in sales and profits

4th November 2014 Print

As Associated British Foods reports its full year results Ian Forrest, investment research analyst at The Share Centre, explains what it means for investors.

“Shares in Associated British Foods have outperformed the market so far this year, and today’s full year results were largely in line with market expectations. Overall sales came in at £12.9bn, up 1% at constant currency rates, despite the sugar division seeing operating profits drop by 54%. Additionally, overall pre-tax profits grew by 2% to £1.1bn. The group’s clothing chain Primark saw profits soar 30% while the grocery, agriculture and ingredients divisions also saw profits increase.

“We recommend Associated British Foods as a ‘hold’ for investors due to the continuing growth of Primark, which is soon to open stores in the US, the breadth and diversity of the business and the progressive dividend policy. With the shares looking fully valued we would like to see an improvement in the sugar division and stronger growth elsewhere before recommending that investors get on board.”