Associated British Foods (ABF), which also owns budget retail chain Primark, has said it is on track to surpass pre-Covid levels of sales and operating profit.
The food manufacturer has been battling against inflation, alongside the rising costs of energy, but anticipates grocery revenue to inch two per cent higher than 2021.
While Primark sales for the first half of this year are expected to be “well over” 60 per cent ahead of last year – which equates to around four per cent lower that pre-pandemic levels.
It comes as the retailer mitigates raw material inflation and supply chain hurdles with trimming store operating costs – and a “favourable” US dollar exchange rate.
A number of Primark store closures freed up around £650m, ABF said today in its interim results for the six months to March 5.
ABF has opened 27 new Primark stores over the past two years.
Luggage and swimwear have performed well in recent weeks, as reduced travel restrictions in the UK give Primark a boost in the weeks heading into holiday season.
ABF’s sugar division has also traded strongly in the first half of the year, added ABF, with revenue expected exceed last year’s by 20 per cent.
The UK’s sugar production is expected to produce a higher yield in 2022, as sugar prices in Europe rose in response to weaker stocks.
“Primark will feel the sting of inflation in the second half, but at that point price hikes in other parts of the business will be filtering through. The result is management’s unchanged optimism for “significant progress” in underlying profit growth for the full year,” said Hargreaves Lansdown equity analyst Laura Hoy.
“Therein lies the benefit of such a highly diverse business. ABF is best known as Primark’s parent, but the group’s also in charge of several other food-related businesses. The structure is a big part of the reason the group was able to come out of the pandemic with very few scars and is a strength that should carry it through the current inflationary environment as well.”