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(Sharecast News) - Primark owner Associated British Foods warned on Thursday that adjusted operating profits and earnings per share would fall in its next trading year despite forecasting strong sales growth over the next twelve months.
Associated British Foods cautioned that as a result of the timing of recent movements in currency and energy prices, as well as its commercial decision to limit further price increases over the next year, it now expects Primark's profit margin to be lower than the 8.0% expected for the second half of the current year.
ABF said Primark was already attempting to navigate supply chain disruptions, inflation in raw materials, energy costs, and labour rates, while also struggling with heightened purchasing costs resulting from the strengthening of the US dollar against both sterling and the euro.
On another note, the FTSE 100-listed firm said both revenues and profits had improved over the 12 months ending 17 September, principally due to the cessation of certain Covid-19 restrictions.
ABF stated full-year group revenues will be "well ahead" of last year and said it was also on track to deliver a "significant increase" in adjusted operating profits and adjusted earnings per share.
Primark total sales were predicted to be roughly £7.7bn, roughly 40% higher year-on-year at constant currency, driven by increased Q4 sales in the UK and a predicted full-year operating margin of 9.6%.
As of 0830 BST, ABF shares had slumped 7.95% to 1,339.40p.
Reporting by Iain Gilbert at Sharecast.com
