Source: Sharecast
The company posted adjusted operating profit of £684m, down 3%, for the 24 weeks to March 4. Primark profits fell to £351m, compared with £414m a year earlier.
On a pre-tax basis AB Foods earnings for the period rose 1% at £644m, supported by a 23% rise in profits at its foods and division. The firm expects full-year profits to flat, in line with guidance and lifted the interim dividend 3% to 14.2p a share.
"At Primark, we remain cautious about the resilience of consumer spending in the face of ongoing inflation in the cost of living and higher interest rates," it said.
The group said it planned to expand Primark into the southern states of the US anchored by a new warehouse in Florida.
“We chose not to recover all the input cost inflation in Primark and actions on price in our food businesses lagged input cost inflation as usual, and margin declined in the first half as a result. Given the extent of inflation this was to be expected and we regard this level of profitability as satisfactory in the circumstances while acknowledging that there is more work to do on margin recovery,” the company said.
The group said it was focused on passing on some of its higher raw material costs to customers, although it added that inflation had become less volatile, with the price of some ingredients starting to ease.
For the fiscal 2022-23 year, AB Foods expects adjusted operating profit in line with the £1.44bn made in 2021-22.
Annual earnings in its grocery business, which includes the Twinings tea, Pataks, Kingsmill and Ovaltine brands, was forecast to be ahead of the previous year, benefiting from price rises and cost savings.
Ingredients profit was forecast to be "well ahead" of 2021-22 but profit was expected to be down at AB Sugar due to lower UK production of the commodity.
Reporting by Frank Prenesti for Sharecast.com