ABF's Sugar Woes Saved By Primark Performance

Associated British Foods (ABF), the UK food producer that owns Primark budget clothing stores, today…

Associated British Foods (ABF), the UK food producer that owns Primark budget clothing stores, today warned that the company's revenue and profit from sugar will be substantially lower year-on-year.

The Twinings and Kingsmill owner said that grocery sales growth will be flat in the first six months of their financial year.

However, a strong performance by Primark looks set to offset any ill effects from weak sugar prices.

"Adjusted operating profit for the first half is expected to be in line with last year," the company said in a statement. "A much lower profit from gar will be offset by another excellent performance from Primark and encouraging results from grocery and ingredients.

ABF said sales at Primark rose 13% compared with the year earlier period, excluding currency movements, and 14% at actual rates.

“A reduction in EU sugar prices, ahead of regime reform in 2017, has been signalled for some time, although the speed with which the market is adjusting has been faster than anticipated,” the company said in a statement.

“The world sugar price has also fallen to what we believe to be an unsustainably low level, putting further pressure on industry revenues and margins.”

For the full year, ABF cut the forecast of their sugar division's earnings before interest and tax to £275 million from £295 million.