UK sugar production to rise from 900,000 to 1.4m tonnes, says British Sugar owner ABF

Tanks filled with raw juice where the water has been evaporated at the British Sugar factory in Bury

Tanks filled with raw juice where the water has been evaporated at the British Sugar factory in Bury St Edmunds. - Credit: Su Anderson

Primark and British Sugar owner Associated British Foods has again upped its full-year profit outlook after being boosted by strong sales at the low-cost fashion chain.

Colchester's new Primark store. Photo: Cloud 9 Photography

Colchester's new Primark store. Photo: Cloud 9 Photography - Credit: Archant

ABF expects full-year sales at Primark to rise 13% on a constant currency basis, with the UK seeing particularly strong turnover growth of 10%.

Like-for-like sales at the fashion chain are forecast to come in 1% higher, with strong Easter trading having helped reduce discounting.

“After a good first half, third-quarter trading was particularly strong in the lead-up to Easter, benefiting from comparison with prior year results that were affected by poor weather and an earlier Easter holiday,” said ABF in a trading update.

“Favourable weather in the fourth quarter and the strength of our consumer offering resulted in markdowns at lower levels than normal,” it added.

As a result the company said its outlook was “further improved” and that adjusted operating profit would be “well ahead of last year”.

ABF, which owned brands such as Twinings tea, Kingsmill bread and Silver Spoon sugar, generates revenue in Asia, Europe and the Americas and has benefited from sterling’s slump following last year’s EU referendum vote.

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The group said the Brexit-induced fall in the pound would see it benefit to the tune of £85m this year, although it again noted that the British currency’s decline against the dollar has led to higher import costs at Primark, putting some pressure on its first half profit margin.

ABF said that comparable revenue and operating profit at its sugar production business, which includes British Sugar, would be well ahead of last year.

UK sugar production this year had been abnormally low, at 900,000 tonnes, due to a reduction in the contracted growing area in response to the high level of EU stocks brought forward from the previous year.

A reduction in stocks, together with the abolition of sugar quota and export restrictions from October this year, meant that the contracted area for 2017-18 had been increased by a third.

With the crop developing well, as a result of favourable recent rainfall and temperatures, the latest sugar production estimate for the coming season was in excess of 1.4m tonnes, and this would help to mitigate the impact on profit of lower prices, ABF added.