27th Feb 2023 08:23
(Alliance News) - Associated British Foods PLC on Monday lifted annual guidance after a first-half where its Primark retail arm impressed, while inflation has become "less volatile".
In its Food businesses, sales and profit were ahead of expectations in its first half, though margins came under a bit of pressure.
All-in-all, the FTSE 100 constituent now expects annual adjusted operating profit and adjusted earnings per share to be "broadly in line with the previous financial year". AB Foods, which ends its financial year in September, had previously expected profit and EPS below the previous financial year's GBP1.36 billion and 131.1 pence, respectively.
Shares in AB Foods were 2.2% higher at 1,988.50p each in London early on Monday, among the best blue-chip performers.
For the first-half, AB Foods expects sales to be over 20% ahead of the last year at actual exchange rates, or over 16% ahead in constant currency.
Primark interim sales are expected to be GBP4.2 billion, or 19% higher than the year before. The retail group is still facing "significant" cost pressures, but has seen more "resilient" consumer spending than previously forecast.
For the full-year, it now expects Primark to achieve an adjusted operating profit margin of "above 8%", which would be weaker than the 9.8% achieved in the previous financial year.
"At Primark, we now expect an improvement to our previous expectations of adjusted operating profit in the second half as a result of higher sales and some lower operating costs," AB Foods added.
In its Food divisions, it forecasts profit to be in line with the previous year. Brands in its Food division include Allinson's flour, the Blue Dragon range of Asian food products and Kingsmill bread.
"Our Food businesses continue to seek to recover inflation through cost mitigation and price increases. For the half year, we expect both aggregate sales and aggregate adjusted operating profit to be well ahead of the same period last year, albeit at a lower margin. Due to better trading, we now expect adjusted operating profit at Ingredients to be significantly ahead of the same period last year. Adjusted operating profit at Grocery is expected to be slightly lower than last year, with inflation in input costs continuing to run ahead of pricing and cost mitigation activity," AB Foods added.
By Eric Cunha, Alliance News news editor
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