The impact of COVID-19 on the business will also see bonuses relating to the current financial year not paid to ABF’s executive directors. The non-executive directors of the ABF board, including the chairman Michael McLintock, have decided that their fees should be reduced temporarily by 25%.
Commenting on the affects the pandemic has had on the business, ABF said: “As stated in the group’s trading update of 23 March, the group has not seen a material impact in its sugar, grocery, ingredients and agriculture businesses.
“The group has a strong balance sheet and, at close of business last night, has some £1.7bn of cash.”
ABF full-year financial report
Clive Black, head of research at Shore Capital, identified that the decision by ABF’s bosses to request a cut in pay was likely due to the reporting period for the group’s financial results. ABF reports from September to September each year, meaning the coronavirus outbreak falls slap bang in the middle of its 2019/20 results.
While the group’s non-food businesses had taken a hit – particularly discount clothing chain Primark – Black recognised ABF as a high-quality international business that benefited from diversity and excellent management.
“What we do know, however, is that ABF will be here post COVID-19, it will continue to benefit from its diverse and high-quality stream of revenues, operating cash flows and earnings, it will continue to have a well-invested global infrastructure that is relevant to the future, its financial constitution will still be strong and so its equity should be considered a valuable component of a ‘large cap’ consumer portfolio.”
Meanwhile, bosses of sandwich and convenience food manufacturer Greencore Group have also elected to take a pay cut as they furlough colleagues in its food-to-go divisions hit by the coronavirus pandemic.
The board and executive directors have taken a 30% reduction in respective fees and base salary for a period of three months. The wider group leadership team has also taken a voluntary reduction of 20% of base salary for the same period. Greencore said this would be kept under review.