Associated British Foods, the owner of the budget fashion chain Primark, reported a 12 per cent rise in revenues to £9.3 billion this year as budget-conscious consumers around Europe flocked to the discount stores.

However, ABF's profits before tax fell 6 per cent to £495 million after a £65 million loss on the sale of the group’s US packaged oil business. Adjusted pre-tax profits rose 4 per cent to £655 million.

Profits of the company's sugar business, which has underperformed for years, grew by 24 per cent after European sugar regime reforms were completed. ABF will not benefit from the current high sugar prices as prices in Europe are protected from the commodity market.

While other parts of the business have benefited from the recession, the growth of Twinings, the premium tea brand, has slowed as consumers have traded down to other brands of tea.

Twinings today announced plans to cut almost 400 jobs in the UK as it starts processing more tea overseas.

The business is considering closing completely its North Shields tea-packaging site in September 2011, with the loss of all 263 jobs. There are also 129 potential job losses at its plant in Andover.

Marcus Cotter-Stone, international supply director for Twinings, said: “We understand that this announcement may cause concern for some of our employees.

“This is a very difficult but necessary step, which will allow Twinings to remain competitive in our markets worldwide and take full advantage of future growth opportunities.”

In contrast, Primark has expanded rapidly this year.

George Weston, the chief executive of ABF, whose family owns 55 per cent of the company, said: "We would grow faster in the UK and in Spain if we could, but we're not going into the wrong space."

He added that the retailer is unlikely to follow other low-budget fashion offerings such as Tesco online soon.

Mr Weston insisted that ABF is committed to keeping Primark as part of the group. There have been some whispers about demerging the fashion chain from the rest of ABF. Mr Weston said: "I think this period of recession has demonstrated to all of us the value of the diversity we have got in the group. I don't think Primark would be where it is today if it wasn't part of ABF. We feel even more robustly that it's part of us."

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