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April 21, 2020

ABF refrains from proffering guidance, dividend amid fatal Covid-19 cases

Associated British Foods has refrained from providing financial guidance for the year due to the uncertain impact from Covid-19.

By Dean Best

Associated British Foods has refrained from providing financial guidance for the year and will not declare a dividend as the impact from the coronavirus crisis is expected to ramp up in the second half.

The Allied Bakeries owner said Covid-19 had had “very little effect” on its first-half results published today (21 April), even as the London-listed firm was forced to close its Primark clothing stores in March as it joined the effort to curtail the spread of the virus. Top management and executives had previously agreed to take a salary cut and to forego bonus payments.

ABF chairman Michael McLintock said trading in the second half through to the end of August will be “radically different” from the first six months to 29 February.

“Our food businesses have continued to operate fully, providing safe, nutritious, affordable food to customers, and have in recent weeks seen a significant increase in demand,” McLintock said in the first-half earnings statement, which showed group revenue rose 3% to GBP7.6bn (US$9.4bn) in constant-currency terms on an IFRS-16 basis, and 2% in terms of actual currency rates.

ABF’s chief executive George Weston noted today that two employees who worked at the firm’s Italian yeast plant and its Acetum unit have died from Covid-19 in the last three weeks. Another worker in the US is currently in intensive care with the virus.

In addition, the CEO said one of its head officer workers had also passed away from the disease.

“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,” Weston said.

McLintock continued: “As a result [of Covid-19), it is too early to provide earnings guidance for the remainder of the current financial year,” adding that the company will “consider the declaration” of a dividend at the year-end.

“I am confident that, with our strong management team and the financial resources at our disposal, our company will emerge from the difficulties of this period well positioned to return to growth,” he said.

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