DAVY VIEW

Associated British Foods’ (ABF) FY 2022 print was modestly ahead of our expectations, with a strong profit rebound driven by more normalised trading conditions at Primark. Of more pertinence, the outlook for FY 2023 remains unchanged, with management guiding to significant growth in sales, though with profits lower year-on-year (yoy). Current trading at Primark appears resilient, with “positive trading” noted in the UK and “some improvement” in Continental Europe – though margins will be weighed down by externalities. Following earlier hints, ABF has announced a £500m share buyback which, coupled with the total dividend, equates to a shareholder yield of 7.5%. We will hold our FY 2023 forecasts unchanged. The conference call commences at 09.00.