Primark’s sales of women’s clothing boost ABF’s profits to almost £2 billion
- ABF announced that pre-tax profits rose to £1.9 billion in the year to September 14
- Operating profit at the company’s retail division rose by more than half to £1.1 billion
Associated British Foods’ profits have soared this year thanks to a surge in sales in Primark stores.
The FTSE 100 company, whose food brands include Dorset Cereals and Twinings Tea, announced that pre-tax profits rose 43 percent to £1.9 billion in the year to September 14.
The retail division’s operating profit rose by more than half to £1.1 billion thanks to price increases, lower material and freight costs and growth in key markets such as Britain, France and Spain.
Great result: Associated British Foods has seen a huge profit increase after huge sales figures at Primark stores
Primark’s sales in the British Isles, where it generates almost 50 percent of all trade, grew by 2 percent, despite wet summer weather and partly thanks to the popularity of its autumn and winter ranges.
Primark further benefited from stronger womenswear sales, with higher demand for nightwear and knitwear, as well as collaboration ranges with the likes of pop star Rita Ora.
This increased sales by £440 million to around £9.4 billion and increased ABF’s total turnover by 4 percent at constant exchange rates to £20 billion.
AB Sugar’s operating profits also rose by more than half to £181m due to higher sugar prices at its UK and Spanish operations.
George Weston, CEO of ABF, said: “This has been a year of very strong financial and operational progress across the group.
“We have achieved substantial improvement in profitability, excellent cash flow generation and strong returns as a result of consistent, multi-year investments and a return to some normality in our markets and supply chains.”
ABF has declared a special dividend of 27p per share and a final dividend of 42.3p per share, meaning the total dividend has increased by half on the previous year.
However, it warned that lower European sugar prices, driven by increased market supply, would have a “significant” impact on the sugar segment’s revenues this financial year.
In addition, the London-based company is targeting mid-single-digit sales 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 – especially the Primark chain – and makes sensible long-term decisions to help drive long-term growth.’
Associated shares British Foods were 0.9 per cent higher at £23.10 just before midday on Tuesday, although they have fallen slightly since the start of the year.
Fellow food processing company Hilton Food Group said current trading was in line with bosses’ forecasts.
The FTSE 250 company, which supplies supermarkets including Tesco and Waitrose, said its core meat ranges and ready meals were selling well in Europe, while its seafood business had grown sales and core meat volumes.
While Hilton’s sales are rising healthily, the British Retail Consortium found that demand for food and grocery in Britain saw only ‘a modest increase’ last month.
Total retail sales rose just 0.6 percent, which the BRC said was due to a half-year decline that fell a week later than the previous year, pre-budget uncertainty and milder weather affecting winter clothing orders .
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