Higher Primark profits powers owner Associated British Foods to best results in years

Primark owner Associated British Foods has enjoyed its best interim results in nearly 20 years, chief executive George Weston says, thanks to higher profit margins at the clothing chain.

For the 24 weeks ended March 2, ABF saw its pre-tax profits rocket 37 percent to £881million, while its revenues rose £175million to £9.7billion. Profits at Primark, and grocery, ingredients, agriculture products, and sugar divisions were all up.

Weston said that ABF had benefited from global supply chains returning to normal after a series of disruptions since the pandemic, as well as inflationary cost pressures easing across its businesses.

“These are a strong set of results. They’re in fact the best I’ve been able to talk about in 19 years,” he said. “Margins have built back to more normal levels, both within Primark and across the food businesses. That is a consequence of, quite frankly, a restoration of normality in our supply chains and in our inflationary environment.”

Thanks to its strong financial performance, ABF hiked its interim dividend by 46 percent to 20.7p per share, for a shareholder payout worth approximately £155million.

Primark saw its revenues rise six percent to £4.5billion, while its operating profits leapt 45 percent to £508million, thanks to the new stores it opened and the price hikes it put in place last year to offset inflation. It said both sales of womenswear and menswear were strong, with its Rita Ora collection selling particularly well.

Having trialled click and collect over 18-months, ABF said that it will extend it to all Primark stores later this year. It is currently available in 57 out of its 184 UK stores.

ABF’s groceries business, its second largest after Primark, saw its operating profits increase 34 percent to £219million. The unit is home to brands such as Twinings tea, Ryvita, Patak’s, and Kingsmill bread.

Elsewhere, data from market research group Kantar shows that grocery price inflation has fallen to its lowest level in nearly two and a half years. It said that it fell to 3.2 percent over the four weeks to April 14.

The last time grocery price inflation was at that level was November 2021. It added that over those four weeks, shoppers took advantage of promotions to save themselves £1.3billion.