LONDON (ShareCast) - (Sharecast News) - Agribusiness-to-clothing group Associated British Foods on Tuesday reported soaring first-half profits, but warned of increasing prices at its Primark clothing business due to inflation.
AB Foods posted adjusted operating profit of £706m for the 24 weeks to March 5, up from £369m a year earlier. Group revenue for the six months rose 25% to £7.88bn. The interim dividend was more than doubled to 13.8p a share from 6.2p.

The company said it was unable to offset Primark price rises with cost savings would implement "selective increases across some of its autumn/winter stock.

"However, we are committed to ensuring our price leadership and everyday affordability, especially in this environment of greater economic uncertainty," said chief executive George Weston.

AB Foods said its improved results were driven by all Primark stores remaining open and trading throughout the period after Covid lockdowns, except for short spells in Austria and The Netherlands.

"Notwithstanding the inflationary pressures we are experiencing, our outlook for the year is for significant progress in adjusted operating profit and adjusted earnings per share for the group," Weston added.

Sales at Primark sales increased 59% to £3.54bn, while sales in the group's food businesses, which include sugar, grocery, and ingredients, rose 6% to £4.34bn.

The food businesses, which produce brands such as Twinings tea, Kingsmill bread and Ovaltine drinks, were experiencing increasing inflationary pressures on raw materials, commodities, supply chain and energy. AB Foods said it was mitigating this through operational cost savings and price increases.

It added that the Ukraine war had led to higher commodity and energy prices which would result in a greater margin reduction in the food businesses than previously expected for the full year.

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