Nov 7, 2017
Primark spurs 50% profit jump at owner Associated British Foods
Primark has reported strong trading that helped lift full-year pre-tax profits at owner Associated British Foods by 50 per cent as the fast-fashion chain gained market share on the British high street. ABF, controlled by the billionaire Weston family, also benefited from a sixfold rebound in sugar profits and a boost from sterling's weakness, as 60 per cent of its sales are outside the UK. However, the conglomerate, which also owns Jordans cereal and Twinings and Ovaltine drinks, said on Tuesday it did not expect profit margins at Primark to recover in 2018 and that sugar profits would suffer from "Much lower" prices in the EU, which last month abolished production quotas on sugar. ABF shares fell 4 per cent in morning trade in London, having risen 31 per cent over the past 12 months, despite the group saying it expected "Progress" next year in adjusted profits and earnings per share. The retailer buys mainly in dollars but sells mostly in sterling, and ABF's decision to keep prices low at Primark led to its operating profit margins falling to 10.4 per cent in the year to September 16 from 11.6 per cent the previous year. Primark does not sell online but its share of the UK clothing market has grown to 16.5 per cent, from 15 per cent, according to estimates from Société Générale.
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