AB Foods sees first-half sales 'strongly ahead' as Primark surges

Primark owner AB Foods said it expected half-year sales and adjusted operating profit to be strongly ahead of last year and higher than interims in pre-Covid in 2020, driven by the clothing retail chain.

The company on Monday said Primark sales for the first half were expected to be well over 60% ahead of last year at constant currency with an operating profit margin of around 11% as stores remained open except for short periods in Austria and The Netherlands.

It added that the inflationary impact on raw materials and the supply chain at Primark had been broadly mitigated by a reduction in store operating costs and overheads and a favourable US dollar exchange rate.

Like-for-like sales improved compared to the final quarter of the 2021 financial year, AB Foods said.

The outlook for the full year was unchanged with "significant progress" expected in both adjusted operating profit and adjusted earnings per share.

AB Foods also reported increasing inflationary pressures in raw materials, commodities, supply chain and energy at its sugar, grocery, ingredients and agricultural operations.

These had been offset via operational cost savings and price rises where necessary in grocery, ingredients and agriculture, but the company warned that actions on price inevitably lag input cost inflation.

As a result, it expected some margin reduction in foods businesses at the half year but expects a recovery by the financial year-end. It also forecast further growth in profit at AB Sugar at the half year.