A further trading update from Associated British Foods, in light of the rapidly developing Coronavirus crisis, reports no material impact to its agriculture (AB Agri), AB Sugar or grocery and food ingredients divisions. But its retail division, Primark, is under pressure.
On February 24th, ABF released a pre-close trading statement ahead of its interim results due in early April. This forecast a similar operating profit for AB Agri to the £15 million from the first half of the previous year, but from higher revenues (£665m in H1 2019).
The earlier update outlined the risk to the Primark business from interruptions in the supply of goods from suppliers in China. But the group notes that the situation in China has improved, with most factories supplying Primark having re-opened – supply shortages from that country are now expected to be minimal.
Ironically, it is European controls that are causing more concern with Primark stores in Italy, France, Spain and Austria, together accounting for 30% of the chain’s sales, now closed. UK stores, representing 41% of sales, had seen like-for-like sales declines over the last fortnight, with an acceleration in recent days as a result of reduced footfall.
“We are managing the business appropriately but do not expect to significantly mitigate the effect of the contribution lost from these sales,” states the group. “It is too early to provide earnings guidance for the remainder of the current financial year.”