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AB Foods' Primark progress soured by too much sugar

Last updated: 08:23 04 Nov 2014 GMT, First published: 09:23 04 Nov 2014 GMT

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AB Foods (LON:ABF) hailed a "magnificent year" for its Primark retail arm, which helped offset sharply lower profits at its sugar business over the past 12 months.

Discount chain Primark lifted profits by 30% in the year to September 13 helped by what the company described as a highly successful entry into France with sales described as exceptional.

Revenues were 17% higher to "within a whisker of £5bn" with profits further boosted by margins improving as there were fewer promotions.

Primark added 1.4mln ft of new store space over the year, but like-for-like sales rose by 4% as the chain benefited from warm weather in spring and early summer.

Sugar suffered from falling prices and lower volumes ahead of the removal of European quotas in 2017, trends that were compounded by adverse currency movements. Profits were 56% lower at £189mln while revenues fell 22% and ABF warned this year will see another big profit drop though after that the worst should be over.

As well as Primark, chief executive George Weston said the group had seen significant profit progress in grocery, agriculture and ingredients all of which substantially out-performed last year.

Overall, group profits rose slightly to £1.1bn from £1.09bn on revenues of £12.9bn (£13.3bn). The dividend over the year rose by 6% to 34p.

This year, the group said it expects Primark's expansion to continue and Grocery, Ingredients and Agriculture to make further progress but will be a major drag.

“At this early stage we expect a marginal decline in adjusted operating profit for the group but the impact on earnings will be mitigated by much lower tax and interest charges.

“We therefore see limited opportunity to grow adjusted earnings per share in the new financial year.”

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