RECORD profits at Associated British Foods’ (ABF) sugar arm have helped offset weaker results at its discount-clothing chain Primark, which was hit after the group chose not to pass the rise in cotton prices onto shoppers.
Primark’s profits slumped by eight per cent to £309m in the year to 17 September, after its operating profit margins fell from 12.5 to 10.2 per cent – but the retailer said new store openings and falling cotton prices would help it bounce back.
“We grew sales by 13 per cent in the year, which we see as a consequence of opening new stores here and on the continent,” George Weston, chief executive, told City A.M, adding the 223-strong chain was now 25 per cent bigger than it was two years ago.
Weston warned the economic background was tough and would remain subdued in the medium term but said commodity costs, which also impacted its grocery and ingredients business, appear to be subsiding.
Overall ABF, which owns the Twinings and Silver Spoon brands, reported a two per cent rise in earnings per share to 74p after high world sugar prices helped boost profits at its sugar production arm by 31 per cent.
The group was upbeat in its outlook and said it expects to see growth in both sales and adjusted operating profit next year.