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Primark owner Associated British Foods has said it expects an “excellent” profit performance over the first half of the year but warned the effects of a boost from the weak pound would fade later in the year.

In a trading update on Monday, the food, retail and ingredients conglomerate kept its full year outlook unchanged ahead of its interim results to be announced next week.

ABF, which is controlled by the billionaire Weston family, said it expected “all” of its full-year rise in profits to be generated in the first six months of its financial year driven in part by the expansion of Primark and its overseas performance.

Primark sales are set to climb 11 per cent from the same period last year when measured in constant currency and 21 per cent at actual exchange rates. The UK, which generates half of Primark’s sales, generated a 2 per cent rise in like for like sales in the first half of the year. But like for like sales were flat across the group.

ABF also warned that the weakness in the pound would weigh down on its margins in the second half as its currency hedges were carried out at less advantageous exchange rates in the period.

The retailer had warned of the pressures from the weak pound at the start of the year, but reported that sterling’s fall had given a boost to revenues in its grocery, ingredients and sugar businesses. Group sales rose 22 per cent — at constant exchange rates they were up 10 per cent in the 16 week period to January 7.

The grocery business is expected to make further progress, ABF said today, with gains in market share for its Twinings drinks brand in the UK, Australia, France and the US.

ABF shares have fallen 20 per cent over the last 12 months.

Copyright The Financial Times Limited 2017. All rights reserved.
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