Sainsbury's chief executive Simon Roberts has urged the government to help ease rising energy costs for food producers, manufacturers and retailers caused by the conflict in the Middle East, warning of further price rises. Roberts said the single biggest action the government could take to keep prices down was to ensure energy prices for the industry did not rise faster.
Roberts called for an expansion of support on energy bills for food-related businesses, similar to reliefs already announced for other energy-intensive sectors. He highlighted the cost of heating polytunnels for fruit and salad vegetables, higher fuel costs for transport, and running refrigerators as key pressures. Sainsbury's shares fell 3.7% on Thursday after the company warned profits could fall this year due to the conflict squeezing customer budgets and raising business costs.
The supermarket group reported a 1.1% increase in annual underlying profits to £1.03bn for the year to 28 February, helped by ending losses from its financial services arm. However, it said uncertainty over the war meant it was unclear whether profits would be marginally higher or lower than the last financial year, forecasting an underlying profit of £975m to £1.08bn.
WH Smith also felt the impact, cutting its profit forecast for the year ahead by about £10m to £90m-£105m due to uncertainty from the conflict, affecting passenger numbers and consumer confidence. Sainsbury's, which also owns Argos and Habitat, increased annual sales by 4.3% to almost £30bn, with Argos sales rising only 0.7% amid a subdued general merchandise market.
Roberts said the company invested to keep prices down despite cost inflation, gaining its highest market share in a decade. Sainsbury's is increasing use of robots and automation in warehouses and has launched an AI centre of excellence. It expects to open 10 new supermarkets and 20 new convenience stores this year.
