Investors shouldn't get too carried away by this decent set of half-year results from food and retail business Associated British Foods (ABF). Profit growth in the second half will be "tempered" as the group feels the full effect of weak sterling against the US dollar on its retail margins, and the comparative top line benefit lessens. Still, the shares finished higher on the back of a currency-boosted 35 per cent increase in adjusted pre-tax profit to £624m.
There were reasons to be positive at constant currencies, though. On this basis, sales at Primark were 11 per cent ahead of last year, pushing operating profit up by £10m to £323m. Expansion into the US and Europe continues to go smoothly, with 16 new stores opened during the period across eight countries, adding 0.8m sq ft of selling space. But profit growth will be restrained in the second half, as currency hedges bought at more favourable rates expire: the retailer buys its stock in the greenback and sells mostly in sterling and euros.