Primark sales bolster first half profit for ABF

Primark owner Associated British Foods (ABF) has gone from strength to strength as its clothing unit grew 13pc over the half year ending March 1.

ABF maintained full-year earnings expectations as a strong first-half performance from its Primark fashion chain offset weakness in its sugar business.

The discount clothing store saw a 4pc rise in like-for-like sales and has also benefited from new stores after it entered the French market in December, saying it wanted to capitalise on a “huge expansion opportunity”.

Since opening a Marseille branch in December, Primark has started trading from a Dijon store in February and said both shops have traded “strongly” to date.

Primark said it plans to open further stores, including three shops in Paris, two German stores and three UK branches, adding 0.5m sq foot of selling space in the second half of this financial year.

Primark operating profit margin is also expected to be higher than last year, due to warehouse and distribution efficiencies and lower freight rates, according to ABF's pre-close trading update.

Meanwhile, first half revenue and profit from ABF’s sugar division will be “substantially” lower than last year.

“The world sugar price has fallen to what we believe to be an unsustainably low level, putting further pressure on industry revenues and margins. This will be reflected in AB Sugar’s results, particularly in China”, ABF said in a statement.

ABF said it expected adjusted earnings per share for the 2013-14 year to be similar to the 98.9 pence made in 2012-13.

ABF forecast revenue in its grocery business, which includes Silver Spoon sugar, Twinings tea and Ryvita biscuits, will be just below last year’s at actual rates, but with improved profit margins.

It said revenue and operating profit in agriculture was expected to be similar to last year, while revenue and profit in ingredients would be ahead.

ABF shares were down 2.79pc to £29.10 in morning trading.