Associated British Foods was founded in 1935 initially known as Food Investments Limited. It changed its name in 1960. During this period, the company had grown incredibly and has not stopped ever since. It has continually expanded its business by primarily acquisition. Associated British foods has embarked on opening store worldwide and until now it has ventured into Europe, Africa, America, and even Asia. In total, it is presently operating in 47 countries (Ruddick, 2012). The company specializes in foods, spices and of late, clothes retail. Its varied brands such as Primark, Twinings, and Pataks have charmed investors and the chain stores continue growing and expanding worldwide.
The market value of equity of associated British foods has continued changing in the past twelve months. It however does not reflect on the company’s success potential. On the other hand, it is used by investors to determine its size and consequently reflecting on the level of risk. The result determines on the level of investment in a company. It is determined by the number of shares presently. By the early November, the outstanding shares were 791.67 million while the market capital was £ 11,479.28 million (Sparks, 2012). In the twelve months, the trailing average has been impressive to the FTSE 100 and actually did more than expected. The index was 25.9% against the 7.3%as provided by the FTSE 100 (Bloomberg Business Week, 2012). Their sales went up by 15% for the year in profits against the 14% (Best, 2012. Their share index has also grown this year motivating investors to invest in the company.
The good market value of equity has been impressive because of the increasing profits. Increasing profits can be derived from several factors that have been affecting positively the company. First is the launch of the new clothing line that was launched this year (Fletcher, 2012). Against harsh weather, customers lined up in front of the stores waiting to purchase merchandise from the new summer collection. The economic harsh times and high cotton prices did not deter the company from collecting a tidy sum of £3.5 billion (Telegraph and agencies, 2012).
Also the new 19 new stores opened during the year gave the company a total count of 242 stores worldwide. 157 of them are in the UK. In addition, the blooming sugar division of the company was very successful and was also responsible for the extremely good results this year in the stock market and profit margins. In addition, the company made some acquisitions this year all over the world. It acquired the Elephant Atta which is UK’s leading flour brand (Bloomberg Business Week, 2012). It also launched the quantum blue enzyme.
The Associate British Food Company has been among the top companies in the UK stock market. This could be attributed by the aggressive leadership who continue to conquer new markets and increase their share globally. Their persistence and the ability to provide customer satisfying products has also contributed to its rising profit margins. Consequently, the company has kept growing thus increasing its size and value and thus their market value in equity. This has led to investors believing in the company therefore putting at disposal funds to ensure the growth of the company. However, there have been challenges in the yeast production sector in china and this has led to the reduction of profits in the sector. It reduced from 12% to a steady 10% (Share Cast, 2012). This shows that sometimes, challenges will present themselves but through firm foundation and strong dedicated leadership, the company will always endure its bad times.
Best, D. 2012. Analysis: City Left Wondering If More Premier Changes In Offing. Just Foods.
Bloomberg Business Week. 2012. Associated British Foods Plc (ABF: London)
Fletcher, N. 2012. Primark Bucks Poor High Street Trend To Help Lift Associated British Foods profit. Market Forces Live Blog.
Ruddick, G. 2012. Primark Enjoys Summer Sales Surge. The Telegraph
Share Cast. 2012. Associated British Foods Lifts Annual Profits
Sparks, M. 2012. Strong Primark Sales Drive AB Foods Profit Rise.
Telegraph and agencies. 2012. Primark Owner AB Foods Warns High Cotton Prices Will Hit Margins As Profits Surge.