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    ABF   GB0006731235

ASSOCIATED BRITISH FOODS PLC

(ABF)
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Delayed London Stock Exchange  -  11:35 2022-07-04 am EDT
1597.00 GBX   +0.50%
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British baker Greggs warns of increasing cost pressures

05/16/2022 | 02:39am EDT
Customers enter a branch of Greggs bakery chain in London

* 19 weeks like-for-like sales up 27.4%

* Outcome flattered by weak comparison

* Maintains full year profit expectations

* Shares down 1%

LONDON, May 16 (Reuters) - British baker and fast food chain Greggs warned on Monday of increasing cost pressures but said markets were so uncertain that it had given up on providing forecasts for cost inflation.

Greggs, known for its sausage rolls, steak bakes, vegan snacks and sweet treats, said that while expected cost inflation for 2022 had increased from a March forecast of 6% to 7%, it was not providing a new prediction.

"There's just too much uncertainty, we've not seen markets like this," CEO Roger Whiteside told Reuters.

"The combination of restricted supply, war (in Ukraine) impact and demand recovery post-COVID is taking us into territory we've not encountered before," he said.

Other companies in the sector, including Associated British Foods, Tesco and Sainsbury's, have all highlighted increasing cost pressures.

After reporting a rise in first quarter sales, Greggs said its profit expectations for the full year were unchanged.

Shares in Greggs were down 1% at 0815 GMT, extending 2022 losses to 34.5%.

Greggs had warned in March that it did not expect material profit growth in the current year on the 145.6 million pounds ($178.2 million) made in 2021 due to the surging cost of raw materials, energy and staff.

"Looking ahead, market-wide cost pressures have been increasing and consumer incomes will clearly be under pressure in the second half of the year," it said.

However, Whiteside said Greggs was not yet seeing any changes in customer purchases that would reflect the growing pressure on spending in the United Kingdom.

He said consumers might be switching into Greggs because of its value offer. It has not raised prices since January.

Greggs' like-for-like sales in company-managed shops grew by 27.4% in the first 19 weeks of 2022 - a figure flattered by comparison with COVID-19 restricted trading conditions in the same period of 2021.

Like-for-like sales growth in the most recent 10 weeks to May 14, when pandemic lockdowns in 2021 were easing, had averaged 15.8% and it expected this figure to continue to normalize as it compares with more robust trading periods in 2021.

Sales in larger cities and in office locations continued to lag the rest of the estate but transport locations had shown a marked increase in activity in recent weeks.

Greggs opened a net 43 new shops in the 19 week period, taking the total to 2,224. It sees potential for at least 3,000.

Whiteside retires on Tuesday after eight years at the helm and will be succeeded by retail director Roisin Currie.

($1 = 0.8169 pounds) (Reporting by James Davey; editing by Kate Holton, Jason Neely and Emelia Sithole-Matarise)


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
ASSOCIATED BRITISH FOODS PLC 0.50% 1597 Delayed Quote.-20.87%
GREGGS PLC 0.71% 1834 Delayed Quote.-45.43%
J SAINSBURY PLC 0.48% 208.4 Delayed Quote.-24.80%
TESCO PLC 1.10% 257.6 Delayed Quote.-12.11%
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Financials
Sales 2022 16 679 M 20 204 M 20 204 M
Net income 2022 976 M 1 182 M 1 182 M
Net Debt 2022 1 209 M 1 465 M 1 465 M
P/E ratio 2022 12,9x
Yield 2022 2,82%
Capitalization 12 622 M 15 289 M 15 289 M
EV / Sales 2022 0,83x
EV / Sales 2023 0,77x
Nbr of Employees 128 000
Free-Float 44,6%
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Number of Analysts 21
Last Close Price 1 597,00 GBX
Average target price 1 989,17 GBX
Spread / Average Target 24,6%
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Managers and Directors
George Garfield Weston Chief Executive Officer
John George Bason Finance Director & Executive Director
Michael G. McLintock Chairman
Ruth L. Cairnie Senior Independent Non-Executive Director
Wolfhart Gunnar Hauser Independent Non-Executive Director
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