Associated British Foods (ABF) has reported strong figures for the last financial year, mainly due to the strong sales at its clothing arm Primark.
ABF had total revenues of £13.3 billion and Primark accounted for 32 per cent of this. Primark also accounted for 43 per cent of ABF's total products. Sales at Primark stores open for a least a year rose by around 4.5 per cent in the 12 months to 13 September.
However, ABF said the world sugar price continues to be "unsustainably low", at around 17 cents per pound, which is affecting the overall figures. ABF warned that revenue and adjusted operating profit would be substantially lower than last year due to a decline in sugar prices, lower volumes in north China and a currency hit.
For the sugar unit, “the cost base is most critical” and the company is reducing overheads and operating costs to improve the business, ABF Finance Director John Bason said. He added that the British Sugar unit has agreed to pay 20 per cent less for sugar beet in 2016, meaning the company will then have a better cost base.
ABF said said that it expect sales at Primark to be 17 per cent ahead in the financial year based on a constant currency basis. It has also confirmed that it plans to launch its first Primark in the US; it has leased 70,000 square foot of space in downtown Boston where it will open next year and is investing around £200 million in the venture.
For this financial year, the Primark will account for more than 50 percent of group profit, while the grocery division which owns brands such as Twinings, Kingsmill and Pataks will be “getting on for a quarter” and sugar will account for less than 20 per cent according to Bason.
ABF confirmed that it is on track to deliver a strong performance for the year, reiterating a 10 July forecast that full-year earnings would be ahead of last year, after previously saying the figure would be at similar levels to that of the 2013 financial year.
