Annual profits

Primark bolsters AB Foods as annual profits soar

Related British Foods reported an increase in full-year sales and profits on Tuesday, despite soaring input cost inflation, after a stellar performance by its economy fashion brand Primark.

Group revenue for the year to September 17 rose 22% in constant and real currency to £17bn, while adjusted operating profit rose 42% to £1.44bn .

Pre-tax profits were £1.08bn, down from £725m a year earlier.

Revenue from its grocery business – which includes Ovaltine, Allied Bakeries and Twinings – rose 3% at constant exchange rates to £3.74billion as prices rose, although a margin lower contributed to a 3% decline in adjusted operating profit to £399 million. . Sugar revenues jumped 18% to £2.02bn.

However, the main driver of growth was retail, where revenue rose 40% at constant currencies to £7.7bn and adjusted operating profits jumped 135% to reach £756 million. The company attributed the strong performance to an increase in footfall after Covid-19 restrictions ended as well as “more normal” customer behavior post-pandemic.

Michael McLintock, Chairman, said: “As we began to experience a more normal operating environment, we encountered the most volatile economic conditions in many years, with steeply rising and widespread inflation, as well as lower input costs. and highly volatile exchange rates.

“We estimate that inflation has increased costs across the group by around £1bn this year alone.”

Looking ahead, he added: “The group continues to face significant headwinds from high inflation, particularly energy costs, exchange rate volatility and pressure on consumer discretionary spending.

“However, I remain confident that the group has the business model to deliver a year of further sales growth. We look forward to Primark’s accelerated store roll-out, particularly in the US, and continued digital development, including the launch of a new click and collect trial in stores across North England and Wales.”

Unlike most of its rivals, Primark still does not have an online operation.

Managing Director George Weston said: “Substantial and volatile input cost inflation will be the most significant challenge in the new fiscal year.”

Prices would remain unchanged at Primark, he said, despite “significant” inflation in input costs and “strongly moving” exchange rates.

“As a result, in the current financial year we expect significant growth in group sales driven by food pricing, as well as some pricing and space expansion at Primark. Our outlook remain unchanged. We continue to expect lower group adjusted operating profit and adjusted earnings per share than the year just ended.”