Primark's 'magnificent year' boosts profit at AB Foods

Primark store in Berlin

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Primark owner Associated British Foods says the budget fashion chain has had "another magnificent year", with total sales up 16% to £4.95bn.

AB Foods credited an increase in the number of Primark stores, and the popularity of its autumn/winter and spring/summer ranges, for the performance.

The chain added 21 new shops in the year, taking its total to 278.

The strong performance helped lift pre-tax profit at AB Foods to £1.02bn.

"Primark's trading success and significant expansion delivered another magnificent year," said AB Foods chief executive George Weston.

The budget fashion retailer opened its first stores in France in the year, and it said sales across all five of its stores in the country had been "exceptional".

Not so sweet

The company said its grocery division, which includes well-known food brands such as Kingsmill and Ovaltine, had also made "good progress".

However, it said the group's profit growth had been held back by lower sugar prices in the EU.

AB Foods said a shortage of sugar available in 2011-12 had driven prices to "exceptional" levels, but a combination of the abolition of sugar quotas and increased competition meant it now expected prices to continue to fall.

The strong pound also hit the company, and it said translating overseas sales back into pounds had "a significant impact" on its business in the year.

Price deflation in some of its major commodities, with the price of wheat, barley, corn oil and rice all falling during the year, had also had a "key influence" on its performance.

AB Foods warned as a result of these changes, it saw "limited opportunity" to grow adjusted earnings per share in the new financial year.

"With the strength of the group's balance sheet and strong cash generation, we have every reason to be confident of further progress," it added.

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