AB Foods profit to rise but Primark stalls

Associated British Foods said it expects a rise in half-year operating profits despite a slowdown at its discount fashion retailer Primark and flat profits at its UK sugar operations.

The London-based company said Primark's like-for-like sales will be three per cent ahead while its operating profit margins will be lower reflecting a tax hike in the UK and higher cotton prices, and margins will stay under pressure in the second half.

Profits from sugar will be higher driven by rises in Spain and China helping to offset a fall in Illovo and flat profits in the UK, but higher processing will hit UK profits by £20m for the full year.

AB Foods was giving an update for its half-year to 5 March and ahead of its full interim results on 27 April.