© Reuters

Primark’s owner Associated British Foods will hold off paying a dividend despite operating profits at the high street retailer beating its earlier forecasts. Primark reported adjusted operating profits of £362m for the year to mid-September, above the £350m top of ABF’s guidance range for the division, while profits in each of the group’s other units either held steady or increased.

After a difficult period of trading in March and April when Primark stores shut, the chain reopened earlier and traded better than ABF had anticipated, building a year-end cash balance of more than £1.5bn.

But a day after ABF warned of a potential £375m hit to Primark sales from new European lockdowns, the group said it would not pay a final dividend for the 2020 financial year while it monitored the impact of the latest restrictions during the Christmas trading season.

Nonetheless ABF said Primark sales and profit should be better in the 2021 financial year, which started 7 weeks ago. Overall group pre-tax profits fell by 40 per cent to £686m, while Primark operating profits were 60 per cent lower than a year earlier.


IWG, the serviced office provider formerly known as Regus, said support for tenants could increase from £80m to around £100m by the end of the year. IWG said it had experienced “good sales activity” in July, August and September, but it warned that was being offset by higher customer turnover and lower service revenue, which has previously made up almost 30 per cent of IWG’s revenue.

Amigo, the guarantor loan group that has been working with the Financial Conduct Authority to resolve a backlog of customer complaints, said it had now reviewed and reached a decision on more than 25,000 of them. Only 2,500 customers have yet to receive a final response to their complaint. But Amigo said the overall number had remained high for longer than expected, and its provision for dealing with them would be increased from £116m to more than £150m leading to a charge to the lender’s profit and loss account of more than £85m.

Housebuilder Crest Nicholson said adjusted pre-tax profits will be nearer £45m than £35m, its previous guidance range. Current sales rates are slightly ahead of the pre-Spring lockdown level, and Crest plans to reinstate its dividend when it announces half-year results.

In other news on Tuesday, British American Tobacco has bought some nicotine pouch products from US company Dryft Sciences, Premier Oil has won creditor support for its takeover by Chrysaor, and Weir Group has published a third-quarter trading update.

Beyond the Square Mile 


Surging trading revenue and lower than expected bad loan provisions propped up BNP Paribas in the third quarter, helping France’s biggest bank to beat profit estimates. Net income fell 2 per cent compared to the same period last year to €1.9bn, while revenues were flat at €10.9bn. BNP has tried to take advantage of some banks pulling back from lending due to the impact of the coronavirus and low rates in its home market, extending its balance sheet to try to become the dominant force in European investment banking.

AMC Entertainment, the world’s largest cinema chain, on Monday night reported a 91 per cent fall in revenues for the three months to the end of September after theatre goers stayed away. Tenet, the Christopher Nolan epic that Hollywood had hoped would jump-start the movie business, made just $54m at the US box office. Losses at AMC widened to $906m for the period, from $55m a year ago, as theatres remained open but empty.

Jack Dorsey will remain as chief executive of Twitter after winning the backing of the board, including activist hedge fund Elliott Management. Elliott took a 4 per cent stake in the social media company in February and agitated for management changes to improve performance. The company created a “management structure committee” to review Mr Dorsey’s leadership. But on Monday that committee “expressed its confidence” in the company’s leadership as well as its recent financial performance.

Essential comment before you go

Thomas Jefferson, third president of the USA, circa 1790 © Hulton Archive

Robin Wigglesworth
Value investing is now on its worst run since the death of Thomas Jefferson and the quant funds than spot profitable patterns are no exception. But it would be a brave person who declares that the sun has set on quantitative investing. To some extent we are all quants now.

Banks have argued throughout this pandemic that their balance sheets are able to withstand the fallout from the virus on their loan books and that they should be allowed to resume paying dividends. That message hasn’t changed in the last day or two.

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