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Associated British Foods grew revenues by 20% in the quarter encompassing Christmas as it benefited from a less volatile inflationary environment, easing commodity costs and “resilient” consumer spending.

Group revenue for the 16 weeks ended 7 January 2023 was £6.7bn, up 20% at actual exchange rates and 16% higher at constant currency.

ABF said it continues to see significant cost pressures but inflation has become “less volatile” and recently some commodity costs have declined. Consumer spending has proven to be more resilient in this trading period than anticipated at the start of the financial year.

Aggregate revenue from its food businesses was 23% ahead of the comparable period last year at actual currency and 17% ahead at constant currency.

This increase was primarily driven by price actions to recover significant input cost inflation in its grocery, ingredients and agriculture businesses, while sugar revenues reflected higher sugar and co-product prices in Europe and Africa.

In AB Sugar, UK sugar production from the 2022/2023 campaign is now expected to be some 0.74 million tonnes, lower than its previous forecast of 0.9 million tonnes, and compared to 1.03 million tonnes last year.

In grocery, inflation in input costs continued to run ahead of pricing to recover margins and for the full year the group continues to expect some erosion of adjusted operating profit margin.

Ingredients performed very strongly in the period and it now expects full-year operating profit to be ahead of last year.

Its Primark retail business saw “good” trading in all markets, with a “very strong” Christmas period.

Footfall was strong in both the UK and the Eurozone, unit volumes increased, and sales were 18% ahead of last year at actual exchange rates and 15% ahead at constant currency.

For the full year, ABF expects the aggregate profit of its food businesses to be ahead of the last financial year but with a lower margin.

At Primark, early trading in this new calendar year has been encouraging, but macro-economic headwinds remain and may weigh on consumer spending in the months ahead.

For the full year, ABF said expectations were unchanged, with significant growth in sales and adjusted operating profit and adjusted earnings per share to be lower than the previous financial year.

ABF shares have eased back 0.7% to 1,856p this morning.

Morning update

THG has appointed board member Damian Sanders as chief financial officer with immediate effect.

He takes over from John Gallemore, who has been appointed chief operating officer.

Sanders has been a member of the THG board for the past two years, joining as an independent non-exec director on 17 November 2020. Prior to joining THG, he was a senior audit partner at Deloitte for 20 years

“Through his work with and knowledge of THG, the Board believes Damian is ideally placed to take on the role of CFO,” THG stated.

The appointment will enable Gallemore, who has been covering both the finance and operations functions until now, to focus solely on the role of COO and build on the “excellent progress he has overseen in THG’s global fulfilment footprint”.

Chair Charles Allen commented: “On behalf of the Board I’d like to thank John for his hard work and dedication as CFO of THG. Having effectively been undertaking two jobs to date, we are delighted that he will now be able to devote a singular focus to driving the operations of the Group where his experience is invaluable.

“We welcome Damian to the business in an executive capacity. I have got to know Damian well since my appointment as chair, and his financial skill, commercial acumen and governance expertise means that he will hit the ground running. Damian has significant experience as a former senior audit partner and that, coupled with his wide industry and listed company experience, in addition to his in-depth knowledge of THG’s businesses and its people, will prove hugely beneficial to us as we continue to grow and build further on our corporate governance standards.”

Sanders added: “I’m delighted to be taking on the role of CFO at THG. I’ve got to know the business well in the two years since I joined the Board and now look forward to working in an executive capacity to help drive the group forward as we continue to grow on a global scale.”

Elsewhere this morning, pub group Marston’s grew like-for-like sales by 12.9% in the 16 weeks to 21 January, including the impact of the Omicron variant in December and January last financial year.

Like-for-like sales in the first eight weeks of the 16-week period to 26 November 2022 were up 6.8% and in the following eight weeks like-for-like sales were up 19.2%.

The comparative like-for-like figures for its 2020 financial year were up 4.5% for the 16-week period.

Drink sales have continued to outperform food sales, once again reinforcing the steadfast trading resilience of our predominantly community pub estate.

CEO Andrew Andrea commented: “We have continued to see positive sales momentum through the festive season and into the new year, with particularly strong demand on the key Christmas and new year trading days. Whilst we still have certain cost challenges to navigate in 2023, we are well positioned to continue to progress our strategy and are encouraged by the level of consumer resilience experienced to date. The pub clearly remains an affordable treat which is attractive to consumers, and we continue to see good traction from those sites within our portfolio which have been converted to our Signature format.

“Marston’s pub estate is well invested, and our geography and proposition lends itself to benefit from underlying consumer trends. Whilst still early in the new year, trading momentum continues to build, and our primary focus remains to meet our strategic goals of achieving £1bn sales and reducing our debt to below £1bn with all the subsequent benefits that both of those milestones will bring to our shareholders.”

On the markets this morning, the FTSE 100 has fallen back 0.5% to 7,745p.

Risers included Nichols, up 2.8% to 1,059.3p, Hotel Chocolat, up 1.9% to 214p and PayPoint, up 1.3% to 537.8p.

Fallers include Science in Sport, down 2.2% to 13.2p, Just Eat Takeaway.com, down 1.5% to 2,066.7p and Britvic, down 1% to 773.5p.

Yesterday in the City

The FTSE 100 started the week up 0.2% to 7,784.7pts.

Risers yesterday included Ocado, after its falls last week, bouncing back 3.9% to 735.6p, Associated British Foods, up 2.4% to 1,869.5p, Finsbury Food Group, up 2.2% to 93p, Domino’s Pizza Group, up 1.7% to 315.4p, DS Smith, up 1.5% to 351.4p and Britvic, up 1.2% to 781p.

The day’s fallers included McBride, down 2% to 24p, Nichols, down 1.9% to 1,030p, Hotel Chocolat, down 1.9% to 210p, Kerry Group, down 1.7% to €86.41 and Marks & Spencer, down 1.4% to 148.9p.

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