Associated British Foods has reported a near doubling in first-half profit, but said its Primark clothing business would have to raise prices because of the severe inflationary pressures it was facing.
The group said that inflationary pressures were such that it is unable to offset them all with cost savings, and so Primark will implement selective price 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," commented chief executive George Weston.
AB Foods, which also owns major sugar, grocery, ingredients and agricultural businesses, made adjusted operating profit of £706 million (€840 million) in the 24 weeks to March 5, up from £369 million (€439 million) in the previous corresponding period.
Group revenue rose 25% to £7.88 billion (€9.37 billion). In February, the group had previously announced that it expected sales for the half to be up considerably on the previous year.
The better outcome reflected all Primark stores remaining open and trading throughout the period except for short spells in Austria and The Netherlands. That compared to prolonged periods of store closure in the United Kingdom and Europe in the first half of the previous year. The group is also said to be toying with a click-and-collect model.
"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," added Weston.
Food Business Sees Sales Up
Associated British Foods' food business saw sales up 6%, while adjusted operating profit was down 9%, with the group saying that higher input cost inflation, logistics challenges and COVID-related labour absences have all impacted its business.
"Our food businesses have once again proved their operational resilience and Sugar had another strong period, building on its recent track record of recovery," said Weston.
"Measures to mitigate higher costs in all our businesses have been taken and more are planned."