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Last Updated: Monday, 11 September 2006, 11:26 GMT 12:26 UK
Sugar price setback for AB Foods
Silver Spoon sugar packet
AB Foods brands include Silver Spoon sugar
Lower earnings from sugar and soaring energy costs will restrain profits at Associated British Foods, the company has warned.

AB Foods, which owns discount clothing chain Primark, said energy will cost it 7m more in the second half of 2006.

Greater world competition will cut prices for sugar, which accounts for 20% of AB Foods profits, it said.

AB Foods is expected to report annual profits of about 545m on 16 September, down from 590m in 2005.

High Street hopes

The reduced profits from sugar have been triggered by reform in the global market, with the European Union reducing subsidies for sugar beet production.

Primark store
Sales at Primark are steaming ahead, owner AB Foods says

AB Foods owns the Silver Spoon sugar label. It plans to close two of its six sugar beet factories during 2007.

However, Primark remains a strong draw for UK consumers, with sales at the retailer up by 3% over the year.

"Primark is going like a train", AB Foods finance director John Bason said.

The clothing chain accounts for 30% of AB Foods profits and Primark continues to expand.

New Primark outlets, including its first store in Spain, are being opened at a rate of one a week, AB Foods said.




SEE ALSO
Sugar costs hit Associated Foods
19 Apr 06 |  Business
Sugar growers warned of 10% cut
05 Feb 06 |  England
Q&A: Sugar subsidies
19 Sep 05 |  Business
Primark boosts AB Foods profits
08 Nov 05 |  Business

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