Associated British Foods has raised its full-year profit outlook for the second time in four months, driven by strong trading from both its Primark clothing business and its food operations in its latest quarter.
In a pre-close trading statement, AB Foods said it now expected adjusted operating profit, its key profit measure, for the year to Sept. 16 to be "slightly better" than its previous expectation of "moderately ahead" of 2021/22's £1.435 billion (€1.67 billion).
Britain's consumers have shown resilience in 2023 despite high inflation and rising borrowing costs. However, industry data has shown spending lost pace in August.
AB Foods, whose shares have risen 27% so far this year, said Primark's sales for the 2022/23 year were expected to be around £9 billion (€10.48 billion). This is 15% ahead of 2021/22, with like-for-like sales up 9%.
Primark's growth has been driven by selective price increases, well received ranges and strongly performing new stores.
Looking ahead to its 2023/24 year, the group forecast Primark's operating profit margin would 'recover strongly' from the around 8% expected in 2022/23.
It also forecast a 'substantial improvement' in profitability at its sugar business.
In the fourth quarter of its financial year, Primark's sales were around 15% higher than in the same period last year, with like-for-like growth of around 8%.
In the same quarter, its Grocery business traded 'ahead of expectations', it said, while its Sugar business performed 'slightly better than expected'. Adjusted operating profit in its Ingredients business is expected to be 'well ahead of last year', while its Agriculture business is expected to report a profit 'modestly below' that of last year.
Additional reporting by ESM