Associated British Foods’ third-quarter revenue was broadly flat at £5.3bn, after adjusting for currency movements.
Primark’s revenue rose 3% to £2.9bn, driven by new store openings.
Full-year underlying operating profits expected to land below last year’s level of £1.7bn.
Aarin Chiekrie, equity analyst, Hargreaves Lansdown:
“Associated British Foods (ABF) hasn’t done much to whet investors’ appetite, after announcing broadly flat third-quarter revenue of £5.3bn, after adjusting for currency movements. This comes as low single-digit growth across three of its larger divisions was offset by sharper declines in its smaller Sugar and Agriculture businesses. The group’s crown jewel, Primark, posted modest 3% growth over the period, despite a challenging retail environment across most of its markets, especially in Europe. New product launches and increased marketing investments are the key levers being pulled to attract more customers through its doors. However, Primark’s growth was driven entirely by new store openings. Stripping these out, Primark’s like-for-like sales fell by 2.2% over the period.
The Sugar business is a particular pain point, with oversupply in Europe and higher gas prices due to the Middle East conflict weighing on profitability. As a result, the division’s full-year outlook has worsened, and operating losses are now expected to land between £25-60mn, before further deteriorating next year. All in though, ABF reiterated its rather vague full-year guidance for group-level underlying operating profits to fall below last year’s level of £1.7bn. But today’s update has done little to hint that a sharp improvement in fortunes is just around the corner, and consensus market forecasts of a roughly 13% decline in operating profits to around £1.5bn feel more realistic to us.”
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