Associated British Foods plc LON:ABF, owner of budget fashion chain Primark, has warned on today that earnings for its current financial year could be damaged this year and probably more next year if current exchange rates remain poor as a result the company was the highest faller in the U.K. FTSE 100 Index
Over the past year the euro/dollar has weakened by more than 20% and as such has had an impact on AB Foods’ which when the results were converted into sterling showed a loss of 11 million pounds for the first six months of its financial year ending this September. Based on current exchange rates the impact for end of year results would be around 25 million pounds. The group has cautioned however that currency movements could potentially have a greater impact where it imports/exports in one currency and sells in another.
“If the current euro weakness against sterling and the U.S. dollar persists this will have an impact on the group’s operating profit for the remainder of this financial year and a greater impact next year,” it said.
By 11.15am BST Shares in AB Foods, had dropped by 3.6% percent to 2,760 pence which made it the highest faller in UK FTSE 100 index.
George G. Weston, Chief Executive of Associated British Foods plc LON:ABF said: “We have to mitigate the financial effects of it to the extent that we’re able to and we have to, in Primark’s case, protect our consumers from the effect of it,” he said.
Analysts at Liberum Capital have reiterated their BUY rating with a target price 3,600 GBX