Primark womenswear sales boost ABF profits to almost £2bn

Associated British Foods’ profits have soared this year, boosted by bumper sales in Primark stores.

The FTSE 100 company, whose food brands include Dorset Cereals and Twinings Tea, revealed its pre-tax profits rose 43 per cent to £1.9bn in the year to September 14.

Operating profits at its retail division soared by more than half to £1.1bn thanks to price increases, lower material and freight costs, and growth in key markets such as the UK, France and Spain.

Primark’s revenue in the British Isles, where it derives almost 50 per cent of all trade, rose by 2 per cent, despite wet summer weather and thanks in part to the popularity of its autumn/winter ranges.

Primark also benefited from higher sales of womenswear, with increased demand for eveningwear and knitwear, as well as collaboration ranges from artists such as pop star Rita Ora.

This helped its revenue increase by £440 million to around £9.4 billion and increased ABF’s overall turnover by 4 per cent at constant exchange rates to £20 billion.

AB Sugar’s operating profits also more than halved to £181m due to rising sugar prices across its businesses in the UK and Spain.

George Weston, chief executive of ABF, said: “This was a year of very strong financial and operational progress across the group.

“We achieved substantial improvement in profitability, excellent cash generation and strong returns as a result of consistent investment over several years and a return to some normality in our markets and supply chains.”

ABF has declared a special dividend of 27 pence per share and a final dividend of 42.3 pence per share, meaning its total dividend has halved from the previous year.

However, it warned that lower sugar prices in Europe, caused by high market supply, would “significantly” affect sugar segment profits this financial year.

Additionally, the London-based company is targeting mid-single-digit revenue growth at its Primark stores.

Russ Mould, investment director at AJ Bell, said: ‘Associated British Foods is a company that really knows what it is doing.

“It understands its audience – particularly its Primark chain – and makes sensible long-term decisions to help drive long-term growth.”

Associated British Foods shares They rose 0.9 per cent to £23.10 just before midday on Tuesday, although they have fallen slightly since the start of the year.

Food processing company Hilton Food Group stated that current trading was in line with employers’ forecasts.

The FTSE 250 business, which supplies supermarkets such as Tesco and Waitrose, said its core meat and ready meals ranges were selling well in Europe, while its seafood division had grown revenues and core meat volumes.

While Hilton’s turnover is growing healthily, the British Retail Consortium noted that demand for food and groceries across the UK only saw “a modest increase” last month.

Total retail sales rose just 0.6 percent, which the BRC attributed to the half-year falling a week later than a year earlier, uncertainty ahead of the budget and milder weather that affected clothing orders. winter.