Why ABF expects tougher second half

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.

Operating profit in the grocery division was up 4 per cent to £151m. Inflationary cost pressures and competition took their toll on Allied Bakeries' margins despite higher sales volumes, but the divisional margin was still in positive territory at the end of the period. Twinings Ovaltine continued its expansion into foreign markets, with 80 per cent of its sales now coming from overseas. It performed particularly well in developing markets such as Vietnam and Brazil, and launched new products in Thailand.

A recovery in sugar prices and increased production in Africa sweetened the sugar division, with revenue up 16 per cent on a constant currency basis. And sugar prices could have further to run as 2017 is set to be the second year of a global sugar deficit, while tightened stock in the EU and a stronger dollar helped.

Analysts at Credit Suisse expect adjusted pre-tax profits of £1.3bn for the year ending September 2017, giving EPS of 121p, up from £1.1bn and 106p in FY2016.