Associated British Food (ABF) owners of British Sugar and Primark, has said that despite the fall in global food prices, Primark the fashion side of the company has beaten its earnings expectations.
With a global decline in commodity prices, especially sugar, the company will be facing extensive headwinds over the next year which will affect its earnings growth.
Figures show a drop in group revenue of 1%, sending adjusted pre-tax profits down 6% to £1.03billion in the year to 12th September, with pre-tax profits dropping 30% to £717million.
Despite sugar being the weakest commodity, other parts of the ABF business improved, including the ingredients unit, which increased 85% to £76million, whilst the retail side of the business saw Primark’s sales increase 8% to £5.35billion.
The success of Primark was due to 20 new stores opening, including the first store to open in Boston in the US earlier this year.
Charles Sinclair, ABF chairman said he expected the price of sugar to start stabilising in 2016 adding: “At current rates the translation impact would be at a similar level to last year but the transactional impact would be greater and will be seen primarily in Primark and British Sugar. At this early stage we expect the currency pressures to lead to a modest decline in adjusted operating profit and adjusted earnings for the group for the coming year.”
