Primark drives AB Foods profit rise

Associated British Foods beat forecasts with a 20 percent rise in first half profit, driven by a stellar performance from its Primark clothing chain and a recovery in its grocery division.

The firm said on Tuesday it had made underlying operating profit of 496 million pounds ($756 million) in the six months to March 2.

That compared to analysts' average forecast of 485 million pounds and was up from 412 million pounds in the 2011-12 half year. Revenue increased 10 percent to 6.33 billion pounds.

Many British retailers have been finding the going tough as consumers fret over job security and a squeeze on incomes.

Primark, with its focus on low prices, has been one of the few to buck the gloom. Its sales rose 24 percent, helped by 15 new store openings. Sales at stores open over a year increased 7 percent.

AB Foods' underlying earnings per share rose 22 percent to 41.9 pence and the firm is paying an interim dividend of 9.35 pence, up 10 percent.

It said it expected to make "good progress" in its full year.

The group forecast strong profit growth from Primark, although not at the same level of the first half which had the benefit of lower cotton prices, and an improvement in grocery.

The group said these factors would more than offset a reduction in profit from sugar as a result of lower EU production and lower prices in China.

Shares in AB Foods, 55 percent of which are owned by the family of Chief Executive George Weston, have risen 51 percent over the last year. They closed Monday at 1,847 pence, valuing the business at 14.6 billion pounds.