Primark Owner AB Foods Says No-deal Brexit Would Be 'Reckless'
Leaving the European Union at the end of March without a deal would be 'reckless' for Britain, the finance chief of Primark owner Associated British Foods said yesterday.
Other business leaders in Britain have warned of catastrophic job losses and chaos at ports if the UK does not agree on terms for its withdrawal from the European Union, now little over two months away.
As well as owning the Primark fashion chain, AB Foods is one of Britain's biggest food producers with brands such as Ovaltine, Ryvita, Twinings and Jordans.
It also owns major sugar, agriculture and ingredients businesses and generated revenue of £15.6 billion in 2018-19.
"If anybody believes that you can just go ahead without some sort of an agreement here, I think that that is reckless," finance director John Bason told Reuters.
"The UK's food supply generally is dependent on the free flowing border," he said.
Bason noted that most of the food AB Foods sells in the UK is produced in the country.
He said the firm had stockpiled essential machinery that is sourced from outside the UK, or consumables, such as ink, that are needed in production processes.
"This isn't like warehouse upon warehouse with food flowing out of it. It isn't like that," he said.
AB Foods today maintained its full-year earnings guidance, reporting revenue growth for the 16 weeks to 5 January in all of its businesses apart from sugar.
Operating Margin Increase
Total sales at Primark, which accounts for about half of the group's revenue and profit, increased 4% at constant currency, though like-for-like sales saw 'a modest decline'. Operating margin increased.
Primark's total sales in the UK rose 1% - exceeding internal expectations in a market which declined year-on-year.
Trading was described as strong in France, Belgium, Italy and the United States but soft 'in a difficult German market.' Primark trades as Penneys here.
Bason said Primark had continued to trade positively in the UK in the early weeks of January.
ABF said overall revenue from continuing operations for the 16 weeks was 2% ahead of the same period last year at constant currency.
It said it still expected adjusted operating profit and adjusted earnings per share for its 2018-19 financial year to be in line with the £1.40 billion and 134.9 pence made in 2017-18.
Sugar Business Revenue
AB Sugar's revenue from continuing operations was 12% behind last year.
The group had cautioned last year that profit in its sugar business would be significantly lower this year reflecting lower EU sugar prices for contracts negotiated at the end of the last financial year.
But it noted "early signs of recovery" in EU sugar prices, which would boost results in the 2019-20 year.