ABF misery eclipses joy at Primark

STRONG half-year sales at Primark were overshadowed as fears that currency moves would hit earnings at parent Associated British Foods, wiping nearly 5.3pc from shares.

The group owns brands including British Sugar, Ryvita, and Kingsmill bread, as well as the low cost fashion chain, and it warned profit margins would be hit because it has to buy most of its raw materials in dollars, which have become more expensive.

The US dollar/euro exchange rate has moved by more than 20pc over the last year. This has had a muted effect on the figures causing a loss of £11m on adjusted operating profit in the first half which is likely to increase to £25m for the full year, the firm said.

But in a gloomy outlook chief executive George Weston said: ‘If the current euro weakness against sterling and the US dollar persists this will have an impact on the group’s operating profit for the remainder of this financial year and a greater impact next year.’ While the firm has not altered its guidance for the current year, analysts at Barclays lowered forecasts for earnings per share by 13pc.

Group pre- tax profit fell to £213m for the 24 weeks to February 28 from £434m on flat sales of £6.2bn. Adjusted profit before tax was down 4pc to £450m while the dividend was up 3pc to 10p a share. The shares fell 151p to 2712p. Trends towards a summer bohemian look and newly-launched denim ranges fuelled a 15pc rise in sales to £2.5bn at Primark. This was helped by an 11pc increase in retail selling space.