Primark to lift profit at AB Foods

Kasmira Jefford
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ASSOCIATED British Foods’ (ABF) booming high street chain Primark is expected to reveal a 21 per cent jump in first half operating profits this week, helping to offset falling profits at its troubled sugar business.

The FTSE 100 owner Twinings tea and Kingsmill bread, which will report its half year results tomorrow, guided in February that operating profits would be “in line” with last year’s profits of £493m.

Sales at Primark are expected to have soared by 13 per cent thanks to new store openings, and by four per cent on a like-for-like basis.

“The highlight of the briefing will be the Primark story – it now has two stores in France and management is confident that at least a 12.2 per cent overall space addition can be achieved this year,” Numis analyst Charles Pick said.

But while its high street chain has flourished, earnings at ABF’s sugar division are expected to have fallen 60 per cent in the first half because of falling European sales and pressure on world sugar prices.

“Broadly flat earnings of £497m should mask very conflicting trends across divisions. We assume very strong progress at Primark, major profit shortfalls in sugar and solid growth in grocery and ingredients,” Jefferies analyst James Grzinic said.

Shares in ABF have risen four per cent since being hit by German sugar producer Suezucker’s profit warning on 9 April.

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