Booming Primark drives ABF profits

PRIMARK to Pataks owner Associated British Foods hailed an “exceptionally strong” performance by the discount fashion chain as first half sales and profits surged.

The company, which also owns Silver Spoon Sugar and Allied Bakeries, said revenues in the 24 weeks to March 2 rose 10% to £6.3bn and operating profits and pre-tax profits were up 20% and 25% to £496m and £452m respectively.

Chief executive George Weston described the performance as a “an excellent set of results” and the product of ABF’s commitment to investing in its businesses over the long term.

In the Grocery division, which includes Leigh-based curry sauces brand Pataks, Twinings Ovaltine and Allied Bakeries, revenues rose 1% to £1.83bn, but operating profit surged nearly 30% to £97m as the result of the non-recurrence of restructuring costs in the Australian food business and in Allied Bakeries.
 
Regarding Allied Bakeries, where £35m has been invested in upgrading a production site in Stockport, ABF said that despite a poor UK harvest the division had continued to produce high-quality bread, launch new Kingsmill products and also recover the higher cost.

The group said work has also commenced at West Bromwich in the West Midlands to replace two smaller production lines with a new bread plant which is expected to be operational by the end of the calendar year.

The performance from Primark in the first half was exceptionally strong. Sales were 24% ahead of the same period last year including 7% like-for-like growth.

Trading over the Christmas period was good but has weakened  during the prolonged period of cold weather since the New Year, ABF said.

Operating profit margin at Primark were boosted by lower cotton prices, a weaker US dollar and lower markdowns as a result of better trading.