Primark owner ABF warns on profits as strong dollar bites

Associated British Foods on Thursday said profit in its next financial year would be less than forecast as a strengthening dollar raised costs at its Primark retail chain.

Primark sources most of its clothing from south Asia and the default pricing currency is the dollar, which on Wednesday hit a 37-year high against the pound and has also strengthened against the euro.

In a trading update, the group said it was also facing much higher energy costs across its stores and had made a “commercial decision to limit further pricing actions” in the next financial year, which starts on October 1, as UK consumers faced a squeeze on their incomes.

As a result, operating profit margins are now expected to be lower than in the second half of the group’s current financial year. There are no changes in group profit expectations for the current year.

Shares in ABF fell 8 per cent in early trading in London.