𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Primark owner Associated British Foods (ABF) has said it expects a drop in profits this year and warned that pressure from gas prices will hit its sugar arm next year.

The consumer giant, which also owns a raft of grocery and agriculture operations, also said trading has been “resilient” over the latest quarter despite “challenging” retail conditions in most markets.

It comes as the group prepares to spin off its Primark by the end of next year, breaking up one of the UK’s largest consumer businesses.

On Wednesday, the group revealed the revenues grew by 3% to £5.3 billion for the quarter to June 20, compared with the same period a year earlier.

ABF said it is on track to deliver adjusted pre-tax profits which will be below the level reported last year.

The group’s retail arm, which is predominantly Primark, saw revenues lift 4% year-on-year to £2.92 billion.

Boss George Weston said the group has improved its customer proposition in recent months through “new product launches, a sharper focus on price and increased investment in marketing”.

Nevertheless, new store openings continued to drive growth, with like-for-like sales dipping by 2.2%.

Primark reported that UK sales were up 1% for the period, with flat like-for-like growth.

It saw a “strong start” to spring/summer trading in March but said this was followed by a weaker performance in April and May.

The retailer said this was linked to the impact of the Middle East conflict on consumer sentiment and unseasonable weather.

However, it said improved weather conditions in June helped drive stronger trading.

Elsewhere, revenues from the firm’s grocery arm, which owns Twinings and Ryvita, grew by 1% for the quarter, with growth across a range of brands partly offset by lower oils sales in the US.

In sugar, ABF revealed a 4% drop in revenues, linked to a decline in selling prices in Europe.

The company also warned that “gas costs are significantly higher due to the Middle East conflict”, predicting that this will lead to a “further deterioration” in profits next year.

Mr Weston, chief executive of ABF, said: “In sugar, the duration and severity of the Middle East conflict have increased gas price expectations for next year, which has impacted our European profit outlook.

“Aside from sugar, our full year outlook for the group is unchanged.

“Across the group, we continued to take targeted actions and make investments to drive performance.

“Several long-running projects have either recently been completed or are nearing completion, reinforcing our confidence in the group’s long-term growth prospects.”