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Associated British Foods, the conglomerate behind a strange mix of sugar businesses, Ovaltine and cheap-and-cheerful high street fashion, is trumpeting “excellent progress on all fronts” after a near doubling of profits in the six months to the end of March. But it warns that the pace of profits growth is unlikely to last.
In its interim results today, the owner of Primark said overall pre-tax profits for the period were £867m, up by 92 per cent on the same time last year. That was boosted by the sale of some businesses, but adjusted profits were also up by 36 per cent, flattered somewhat by exchange rate movements. Revenues, at £7.3bn, were up by nearly a fifth.
In a statement, the company said:
The growth in earnings achieved in the first half has been excellent. We expect the underlying revenue momentum in all of our businesses to continue in the second half. However, profit growth in the second half will, at current exchange rates, be tempered primarily by a smaller translation benefit and the full effect of the devaluation of sterling against the US dollar on Primark’s margin.
Discount retailer Primark has been stung by the drop in the pound since the UK’s vote to leave the EU. The shop chain buys most of its products in dollars, but makes more than half of its sales in the UK. But it has been performing strongly there; like-for-like sales were up by 2 per cent, with overall sales up by 7 per cent. The company also claims a “strong increase in our share of the total clothing market”.