AB Foods buoyed by Primark growth
Associated British Foods hailed a year of “substantial progress” today after discount chain Primark lifted profits 23% and other brands performed well.
AB Foods, which also makes Silver Spoon sugar and Twinings tea, said strong growth across most of its divisions had helped it overcome the impact of rising crop prices and currency fluctuations.
Overall, profits before goodwill were 12% higher at £478m (€688.1m), in line with analysts’ expectations and leaving AB Foods confident it was well-placed for further growth.
Primark, which opened a string of new stores this year including its largest site in Manchester, increased like-for-like sales by 6% as demand rose for cheaper high street fashion.
The group said it managed to capture more than 10% of the discount clothing market amid tough competition from rivals.
It said this was achieved through offering better, well-displayed goods at lower prices. Primark aims to expand its 120-strong chain further, with plans for a small number of stores in Madrid later in 2005.
Important contributors to growth included the Twinings-based hot beverages business, which saw good growth in several key markets.
There was also a good performance by the UK milling and baking business, where improvements in operational efficiency improved margins and profits.
British Sugar, which has six factories in the UK including processing plants at Bury St Edmunds, Newark and Telford, saw profits fall as a result of lower selling prices, due to sterling’s strength against the euro.
AB Foods has been trying to reduce the proportion of profits earned from the sugar business – whose profits are expected to be hit by the changes to the European sugar regime in coming years.
Chairman Martin Adamson said: “The proportion of group profits derived from the non-sugar businesses has increased substantially in recent years and we expect this to continue.”
ABF has been on the acquisitions trail this year, spending £242m (€348.3m) on four companies that include the food brands of G Costa and Billington’s sugar.
In July it made the largest acquisition since the purchase of British Sugar in 1990 with the purchase of an international yeast and bakery ingredients operation and a US-based herbs and spices division from Burns, Philp & Company.
