LONDON (Reuters) - 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 (ABF.L), said on Thursday.
Other business leaders in Britain have warned of catastrophic job losses and chaos at ports if the country 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 pounds 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 maintained its full-year earnings guidance on Thursday, reporting revenue growth for the 16 weeks to Jan. 5 in all of its businesses apart from sugar, sending its shares up to 6.7 percent higher.
Total sales at Primark, which accounts for about half of the group’s revenue and profit, increased 4 percent at constant currency, though like-for-like sales saw “a modest decline”. Operating margin increased.
Primark’s total sales in the UK rose 1 percent - 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.”
Bason said Primark had continued to trade positively in the UK in the early weeks of January.
“AB Foods’ crown jewel is still Primark, and it’s managing to shine through a pretty muddy high street environment,” said
Hargreaves Lansdown analyst Sophie Lund-Yates.
ABF said overall revenue from continuing operations for the 16 weeks was 2 percent 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 pounds ($1.81 billion) and 134.9 pence made in 2017-18.
AB Sugar’s revenue from continuing operations was 12 percent behind last year. The group 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.
Reporting by James Davey; Editing by Paul Sandle/Keith Weir