Primark and grocery sales growth buoy Associated British Foods
Adjusted pre-tax profits for the year improved by 2% to £1.4bn for the year to September.
Primark owner Associated British Foods hailed a “resilient” year as it was boosted by the continued expansion of the high street fashion store and robust grocery sales.
Increased profits at Primark and in the grocery division helped to offset declining profits from the group’s sugar production business.
Nevertheless, statutory pre-tax profits slipped 8% to £1.17 billion for the year to September 14 as it was hit by losses caused by the sale or closure of businesses.
Adjusted pre-tax profits for the year, which strip out exceptional items, improved by 2% to £1.4 billion.
ABF also saw revenues increase by 2% to £15.8 billion for the year, largely driven by Primark which continued to shrug off the malaise affecting many of its high street retail rivals.
The company hailed a “year of strong progress” for Primark, which increased revenues by 4% to £7.79 billion after adding a further 14 stores to its portfolio in the UK and continental Europe.
Primark also improved its profits by 8% to £913 million as it was buoyed by weakness in the dollar, improved buying and better stock management.
However, the retailer’s sales growth was driven by its expansion as like-for-like sales slipped 2%.
In the UK, Primark sales rose 2.5%, driven by its increased shop numbers, while it “outperformed” a weak overall clothing, footwear and accessories market, it said.
Meanwhile, sales in ABF’s grocery division increased by 3% to £3.5 billion, while profits jumped 13% to £380 million.
The group hailed a good year for its Twinings tea business, while its Allied Bakeries division, which produces Kingsmill bread, was hit by the loss of a major own-label supermarket contract and subsequently announced plans to shut its Cardiff factory.
Sugar continued to slump during the period, as sales slipped 7% to £1.6 billion on the back of low EU sugar prices and a poor crop in China.
ABF chief executive George Weston said: “The group delivered a resilient performance this year, with strong profit growth from grocery and Primark, which more than offset the profit decline in sugar.
“We continued to pursue the opportunities to grow our businesses with a gross investment of over £800 million.
“Next year the group is well-positioned for further progress, with the continued expansion of Primark, a material improvement in our sugar profit and strong profit growth in grocery.”
John Bason, finance director at ABF, said Primark has continued to be a “success story” for the retail sector and has proved that people will still shop in high streets.
He said: “We are prepared for a really strong Christmas. A lot has been said about the state of retail and a lack of consumer confidence but we’ve seen 4% growth and that is continuing.
“We have new gifting ranges for Christmas this year and have seen a really strong response for product launches.”