It’s not been the sweetest of days for Associated British Foods. The FTSE 100 conglomerate’s half-year profits more than halved as the throwaway fashion giant that is Primark failed to offset its souring sugar business.
Pre-tax profits for the 24 weeks to February 28 fell from £434m to £213m, but total revenues crept up 1% to £6.3bn (3% on a constant currency basis) as Primark’s sales marched on 12% to £2.5bn. But while operating profits at the discount clothing chain rose 8% to £322m its sugar division lost £3m, which was blamed on falling prices in the quota-ridden EU (Tate & Lyle has also been hit – it announced today it was exiting most of its European bulk ingredients business).
So why won’t ABF free Primark, which is launching in the US later this year, from its smothering embrace? Investors would probably be pleased – despite a 3% increase in the interim dividend to 10p a share, ABF’s shares were down more than 4% to 2,744p in mid-morning trading.
But those are not all investors – a charitable trust run by the founding Weston family controls 54% of ABF’s shares. Add to that that third generation George is currently chief executive and it seems unlikely that the empire, which was set up to straddle the supply chain from farms to fuel, will be unraveled any time soon.