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Most FTSE 100 shares are engaged in only one line of enterprise. However this isn’t the case with Related British Meals (LSE: ABF). I’ve lengthy seen its eclectic assortment of companies underneath one umbrella as a supply of power by way of diversification. Nevertheless, with the share value down 40% over the past 10 years, is my loyalty misplaced?
Primark
By far the largest income for the corporate comes from its retail operations. Worth style/life-style retailer Primark has bucked the development by constructing a thriving bricks and mortar enterprise. Final yr, it opened up eight new shops and has 459 throughout the globe.
The actual progress story for Primark in H1 2025 got here from central and jap Europe the place gross sales grew 21%. The US additionally confirmed good momentum, with gross sales up 17%. This was bolstered by the opening of its first retailer in Texas and a model advertising blitz within the New York metro space.
Nevertheless, the UK market, which accounts for practically half of all gross sales, declined by 4%. In consequence its complete market share diminished from 6.9% to six.7%.
On-line presence
The corporate could blame a gentle autumn for poor gross sales however I’m starting to marvel if its lack of response to constructing a business on-line presence hasn’t assist.
Click on & Gather, which it started rolling out in 2022, is starting to lastly construct momentum. It expects the service to be out there in 187 shops by June, 80% of its UK retailer property. Nevertheless, it has no intention of branching out and providing a full on-line expertise. Certainly, it continues to speed up spending on retailer modernisation.
Grocery
Exterior of Primark, many of the firm’s various assortment of internationally recognisable manufacturers continues to carry out nicely. One of many standout performers is Twinings. Black tea gross sales have been significantly sturdy. This all ties into its ‘wellness’ tea class of inexperienced, natural and fruit variants. These have grown at a compound annual progress charge of seven% since 2022.
However its power in a lot of its manufacturers was offset by continued declining gross sales at Allied Bakeries, which producers the Kingsmill model.
Rising working losses at its bakery division has compelled it right into a strategic evaluate. Within the final week, rumours have emerged that it’s in talks to merge with rival Hovis. Whether or not a deal goes by way of or not, it has a mammoth activity of arresting sliced bread gross sales to extra speciality loaves.
Dividend
The enterprise stays a dependable, if not spectacular, dividend payer. It presently yields 3.3%. It isn’t simple to forecast future payouts as a result of a lot of its returns are attributable to particular one-off funds.
Saying that, its particular dividends do are typically very beneficiant. Between 2023 and 2024, dividend per share elevated by 50%. The interim dividend, which might be paid in July, is about on the similar stage as final yr.
Regardless of the issues confronted at particular person companies, I nonetheless imagine the sum is healthier than its elements. It stays a conservatively-run, majority family-owned enterprise with a powerful steadiness sheet and low debt. It’s a basic buy-and-hold inventory, in my books.
Over time, the reinvested dividends, in addition to a current top-up share buy, imply that it has now turn out to be one in every of my largest holdings. I really feel it’s one to contemplate.
