Thursday 24 April 2014

Associated British Foods (ABF) H1 report 2014

Front cover, report, ABF, H1, 2014
Associated British Foods arrived with their H1 report and the market went ballistic. The full ABF H1 report 2014 can be found here and everything is taken from it. With ballistic I mean that the stock increased directly with 6 to 7% and to be fair my take is that it had nothing to do with the report but on two press releases that were made at the same time upon which one was probably even more important than the other...

One of the reports announced that they have managed to tie Ruth Cairnie that have worked many years for Shell to ABF and the report can be read here. But this report however was probably what caused all the hoiballoi since it says that the next market they are planning to penetrate will be the US and more specifically in Boston and the store will be opened in the end of 2015.

Strategically I would say that it was wise to jump out with this announcement at the same time because the results for the first H1 2014 was not THAT good. Below is the highlights that they brought forward. The revenue was down with 2% which is bad! they claim profit up 1% mind the star though! adjusted profit up 4% but once again mind the star! Adjusted earnings with a little shiny star to it... dividends are up by almost 4% happily without the star. I do not like stars. They make me nervous and suspicious and in this case the star means "before amortisation of non-operating intangibles and profits less losses on the disposal of non-current assets". So...  what was then the non adjusted result?

Highlights, report, ABF, H1, 2014

But before that let us take a look at the income statement for the first half year of 2014 according to ABFs broken year. We see here is that the revenue dropped with the 2% that they also stated and happily the costs were down by 2.4% so in the end the operating profit increased by almost 1%.

ABF, income, H1, 2014

And when we look at the comprehensive income statement we see that the "effect of movements in foreign exchange" is very large and flipping the other way in comparison to back in 2013 so this is indeed bad news and even if it has nothing to do with the operation of the company when that money is transferred home the financial loss will be realised or maybe even already have been. So this I do not like at all but there is nothing to do about it.

ABF, H1, 2014, comprehensive income

Conclusion: The joyride that I seem to be on with ABF has obviously still not stopped. The management seem to be good at masking semi-bad news by bringing forward something very new and exciting which then also all the attention is being focused on. I am sure that they could have reported this both earlier as well as later in comparison to them arriving with the H1 report so it is simply to mask things. I will of course keep my shares to see where it will take me. For the analysis of Associated British Foods 2013 please use this link.

No comments: