Styles and sugar boost Primark's ABF parent
Primark owner Associated British Foods (ABF) saw profits surge 36pc to £652m (€773m) in the first half of its financial year at the Dublin-headquartered fashion chain, as a rejuvenated sugar business and weak sterling boosted its bottom line.
ABF said sales at its Primark business, which trades as Penneys in Ireland, jumped 11pc to £3,2bn (€3.8bn) on a constant currency basis, spurred by increased retail selling space. Among the new outlets it opened in the period was a huge store at Dublin's Liffey Valley shopping centre.
Primark sales were 21pc ahead on actual exchange rates, while operating profit rose 3pc to £323m (€383) on actual exchange rates but slipped 2pc on a constant currency basis.
ABF, controlled by the Weston family that owns Arnotts and Brown Thomas, also said that it received a £51m (€60m) boost to its group bottom line during the first half due to weaker sterling.
Sugar continued to be a major area of growth, with subsidiary AB Sugar recording an increase in revenue of £1,081m (€1,281m) for the period, a year-on-year increase of 33pc.
Operating profit for AB Sugar rose to £123m (€146m) from £3m (€3.5m) in the prior year period, with all regions benefiting from either higher sugar prices, increased volume, or both.
The company said that its move in 2016 to fully own Illovo, the leading producer of sugar in Africa, has enabled it to focus on accelerating its performance improvement and commercial development in markets with high growth in both population and income per capita.
"I said in my statement in last year's annual report that 2016 would be seen as a turning point for AB Sugar. Our sugar businesses were the largest single driver of the group's underlying profit improvement in the first half [of this year]," group chairman Charles Sinclair said.
Meanwhile the group's grocery division also saw operating profits increase to £151m (€179m), up 20pc.
Goods under the AB Foods brand include Twinings, Ryvita, Blue Dragon, and Ovaltine.
Adjusted earnings per share were 59.7p, an increase of 30pc on the previous year, while the dividend per share was 11.35p. Equity shareholder's funds were £7,803m (€9,250m).
In 2015-2016 AB Foods made an adjusted operating profit of £1.12bn (€1.33bn).
"Primark delivered a substantial increase in selling space, which together with a strong consumer offering, contributed to a further increase in our share of the total clothing market.
"Furthermore we achieved a more acceptable rate of return in sugar and further progress was made by our ingredients and grocery businesses", George Weston, Associated British Foods CEO said.
AB Foods employs 130,000 people across 50 countries in Europe, southern Africa, the Americas, Asia, and Australia.