A Critical Analysis of Associated British Foods PLC Shareholder Wealth Creation in the Five-Year Period From 2017 to 2021

Abstract

This study examines Associated British Foods PLC's (ABF) performance in maximizing shareholder wealth over a five-year period from 2017 to 2021. Utilizing a mixed-method approach combining quantitative financial analysis with qualitative assessment of strategic factors, the research investigates ABF's share price performance, dividend policies, and key financial ratios. The study also compares ABF's performance with its industry peer, J Sainsbury PLC, to provide context within the competitive landscape. Findings reveal that despite initial underperformance against the FTSE 350 index, ABF demonstrated significant recovery, particularly in 2021/22, with improved share price performance and dividend payouts. The company consistently maintained higher net profit margins and lower debt ratios compared to its competitor, indicating effective cost management and a conservative financial structure. ABF's diversified portfolio and focus on innovation and sustainability appear to have contributed to its resilience and ability to create shareholder value. However, areas for improvement, such as asset utilization efficiency, were identified. This research contributes to the understanding of shareholder value creation strategies in the food and retail sectors, offering insights for both academics and practitioners in the field of corporate finance and strategic management.