Primark owner Associated British Foods has maintained full-year earnings guidance, but cautioned that revenue and profit at its sugar business would fall by more than previously expected due to lower European sugar prices.
The group trades from 350 Primark fashion stores and also owns major owns major sugar, grocery, agriculture and ingredients businesses. Primark trades as Penneys here.
In November AB Foods had cautioned that in sugar, higher volumes and lower costs would only partially mitigate the effect of much lower EU prices.
Today it forecast a sugar revenue and profit reduction greater than previously forecast for the 2017-18 year primarily as a result of significantly lower EU sugar prices, which hit its British and Spanish businesses.
In the 16-weeks to January 6, AB Sugar's revenue fell 12% on a constant currency basis.
However AB Foods said it still expected "progress" in group adjusted operating profit and adjusted earnings in 2017-18 year.
Group revenue for the 16 weeks period rose 4% at constant currency rates and by 3% at actual rates.
At Primark, which accounts for about half of group revenue and profit, sales rose 7% on a constant currency basis, driven by new store openings.
In the UK, which contributes about half of Primark's revenue, the retailer reported "strong" like-for-like sales growth and market share gains.
However, Primark's sales growth across mainland Europe was held back by unseasonably warm weather in October. It said trading in the US had continued to make progress.
Primark's operating margins in the first half were now expected to be close to those in the same time last year.