Update: Primark and British Sugar to boost ABF profits
PRIMARK’S UK business toasted a “particularly strong” summer of trading today as the budget chain continues to defy the uncertain economic climate.
The retailer, which has 242 stores across Europe, is expected to see revenues rise by 17% over its current financial year, which ends on Saturday.
The figure, excluding currency movements, includes “buoyant” trading in continental Europe, even though much of the region is mired in a debt crisis.
Associated British Foods, which owns Primark as well as household brands such as Kingsmill bread, Silver Spoon sugar and Twinings tea, said profits for the second half of the financial period should be “substantially ahead” of last year.
It said its grocery customers continued to seek value through promotions and price but warned that recently higher wheat prices meant margins at its Kingsmill bread division were likely to come under further pressure.
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In line with its previous update, ABF said second-half revenues within its sugar division would be well ahead of last year, reflecting a “strong commercial environment in Europe and to a lesser degree Africa”.
Prices in China had continued to fall since the half-year stage and revenues would be lower as a result but the overall profit of AB Sugar for the full year would be “considerably higher”than last year with the benefit of European and African revenue increases and a strong operational performance”.
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ABF added that, within its agriculture division, the UK feed business had benefited from higher volumes of sugar beet feed but there had been some margin erosion in the pig and poultry feed markets reflecting another difficult year for the UK livestock industry.
At Primark, ABF estimated that when excluding the addition of 19 new stores over the year sales will be 3% higher in the financial period, with the performance of recently opened shops also exceeding expectations.
The company will boost its presence on London’s Oxford Street later this month with a new four-floor outlet. It will also have 28 outlets in Spain after opening five new stores in the debt-laden country this summer.
Primark has been the star performer within AB Foods over recent years as it has ridden the boom in demand for budget clothing on the high street.