Strong Primark figures fail to lift ABF earnings

Strong trading at retailer Primark failed to boost Associated British Foods yesterday after the Silver Spoon-to-Ovaltine conglomerate warned annual earnings will fall due to the strong pound and weak sugar sales.

The Primark profit rise wasn't enough. Picture: Scott Louden

The FTSE 100 firm, which employs 118,000 people in 47 countries, said operating profit at Primark jumped 8 per cent to £322 million in the 24 weeks to 28 February, driven by an 11 per cent increase in retail space.

The discount fashion retailer, with 287 stores in the UK and Europe, opened ten stores in the period in countries including the Netherlands and Germany as well as relocating its Northampton store to larger premises.

But, overall, AB Foods said its adjusted operating fell 4 per cent to £450m due to the strong pound and weak European Union sugar prices causing a loss at its sugar unit.

It added that the strength of the pound, particularly against the euro, and its weak sugar business would lead to “a modest decline” in annual earnings per share at the group.

At Primark, the firm said its like-for-like sales were held back by unseasonably warm weather in the autumn across northern Europe.

It added that Christmas trading was strong, and that stripping out the distortions of new store openings in the Netherlands and Germany like-for-like sales in the period would have been similar to last year at 3 per cent.

Meanwhile sugar and sweeteners group Tate & Lyle yesterday announced a major restructuring which will see it exit most of its European bulk ingredients business and make changes to its struggling Splenda sucralose unit.

Chief executive Javed Ahmed said the move “strengthens our focus on speciality food ingredients and also our balance sheet”.