Ignoring the impact of exchange rates, Associated British Foods‘ (LON:ABF) revenue in the third quarter rose 32% to £4.0bn. This reflected double-digit growth in the Food business and a near doubling of revenue in Retail as covid restrictions eased.
Trading in the period met expectations and the group’s still expecting “significant progress” in underlying operating profit at the full year.
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Shares were up 2% following the announcement.
Associated British Foods's Earnings
Laura Hoy, Equity Analyst at Hargreaves Lansdown:
“Inflationary concerns were noticeably absent from Primark owner Associated British Foods’ third quarter results. The group’s pushing ahead with its digital expansion, trialing a new click-and-collect service in the UK and management sees full year operating margins recovering to around 10% as expected. This was a departure from the cautious note that CEO George Weston struck at the half-year, when he warned about the impact of inflationary headwinds on margins.
Management said it would be forced to raise prices on its autumn and winter collections back in April. But bikinis and flip flops are still at the top of the shopping list for holiday-obsessed consumers right now. So the impact of these price hikes on volumes is yet to be determined. The group’s in a good position as we head into tougher economic conditions, with its lower-priced items more appealing to cash-strapped consumers, but a slowdown in consumer spending is sure to hit the entirety of the sector.”
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