Primark sweetens ABF profits

STRONG sales at the Associated British Foods (ABF) budget clothing store Primark have been only marginally offset by the effects of a growing European Union sugar mountain, as profits and dividends surged at the group.

Primark said like-for-like sales in the 24 weeks to 5 March grew by 6% with total sales from the stores rising 12% to £448m.

Operating profits at Primark soared 18% to £59m in the period. 'The like-for-like value growth was achieved against a background of 5% price deflation and the margin improvement reflected better purchasing,' said ABF chief executive George Weston.

Group pre-tax profits were up 16% at £268m as ABF reported a good performance across its range of signature brands including Twinings teas, Kingsmill bread, Ryvita crispbread and Blue Dragon ethnic foods.

However, Weston, who has taken over from long-standing chief executive Peter Jackson, reported stalling profits in its sugar division where it is behind the Silver Spoon label.

Weston said: 'UK profit has been affected by an oversupply of sugar in the EU this year as a result of the European Commission's incorrect forecasts of consumption and stocks, particularly in the new member States.

'This is expected to continue to impact throughout the second half. In addition, higher energy costs and a weaker euro compared to last year have further reduced profits.'

The interim dividend is up 14% at 6p. <