Primark owner Associated British Foods has told shareholders it is on course to hit expectations, with strong growth expected in its sugar division, although profits at the fashion chain will take a slight hit.
At the company’s annual general meeting, chairman Michael McLintock said: “This year, AB Sugar will benefit materially from the increase seen last year in EU sugar prices and from further cost reduction.
“We expect another year of strong profit and margin growth in grocery, with Twinings Ovaltine in particular benefiting from a more efficient tea supply chain.”
On Primark he added that three new stores have opened since the end of the financial year, bringing the total to 376 sites across the world – with particular focus on France and Spain.
He added: “We expect margin for the full year to be only a small reduction on that achieved last year, on a lease-adjusted basis, with the effect of a weaker sterling on purchases being largely offset by cost reductions in both the cost of goods and overheads.”
The chairman also said all preparations for Brexit and contingency plans are in place when the UK leaves the EU.
His comments come a month after Associated British Foods revealed pre-tax profits slipped 8% to £1.17 billion for the year to September 14 as it was hit by losses caused by the sale or closure of businesses.
Adjusted pre-tax profits for the year, which strip out exceptional items, improved by 2% to £1.4 billion.
Revenues were up by 2% to £15.8 billion for the year, largely driven by Primark which continued to shrug off the malaise affecting many of its high street retail rivals.
Shareholders are expected to be pleased to hear that improvements are coming in the sugar division, which has suffered recently.
Sales last year dropped 7% to £1.6 billion on the back of low EU sugar prices and a poor crop in China.