Primark owner Associated British Foods has reported a strong rise in half-year profits, boosted by the weak pound.
The group, which also owns household brands such as Kingsmill bread, Ryvita and Twinings teas, has seen its share price climb this morning as investors extended a warm greeting to the numbers.
As of mid-morning ABF shares were up 1.5 per cent to 2,759 pence.
Primark reported a sales rise of 12 per cent at constant currency rates.
The company revealed its adjusted operating profits were up 36 per cent to £652 million in the 24 weeks to March 4, while total revenue rose 19 per cent to £7.3 billion.
Taking into account the sale of its US herbs and spices and Chinese sugar operations, pre-tax profits leapt by 92 per cent to £867 million.
ABF put a figure of £51 million on the uplift to its revenue triggered by sterling’s slump following last year’s EU referendum.
High street clothes shop Primark recorded a total sales rise of 12 per cent at constant currency, and 22 per cent at actual exchange rates.
Chief executive George Weston said the underlying growth of ABF was strong in the first half.
The lower pound was a double-edged sword for Primark however, with its profit margins taking a hit because sterling weakness has driven up costs for some British businesses.
‘The full effect of sterling weakness against the US dollar on Primark’s purchases will result in a greater margin decline in the second half because our currency hedges were at more advantageous exchange rates in the first half,’ ABF said.
However, it added Primark ‘remains committed to price leadership in clothing retail’. In other words, it’s going to stay cheap.
Chief executive George Weston said: ‘The underlying growth of the group at constant currency was strong in the first half.’
‘Primark delivered a substantial increase in selling space which, together with its strong consumer offering, contributed to a further increase in our share of the total clothing market.’
‘Furthermore, we achieved a more acceptable rate of return in sugar and further good progress was made by our ingredients and grocery businesses.’