Associated British Foods (ABF), the owner of Primark, has reported a 12 per cent rise in revenues to £9.3 billion this year as budget-conscious consumers across Europe flock to the discount stores.

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

Profits in the group’s sugar business, which has underperformed for years, rose by 24 per cent after reforms to the European sugar regime were completed. ABF will not benefit from the present 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, has slowed as consumers have traded down to other brands.

By contrast, Primark has been expanding rapidly. The fast-fashion chain opened 12 stores during the year — four in the UK, five in Spain and one each in Germany, Portugal and the Netherlands. Sales in recession-struck Spain and the UK have been particularly strong.

George Weston, 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. In the UK, consumer sentiment will be subdued for a while.” He added that, in the short term at least, the retailer was unlikely to follow other low-budget fashion operations in going online.

There have been some whispers about a demerger of the fashion chain, but Mr Weston insisted that ABF was committed to keeping Primark as part of the group. He 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.”

Graham Jones, analyst at Panmure Gordon, said that the results were better than expected. “The key growth driver was sugar, where ebita [earnings] rose 24 per cent, and, while grocery profits were broadly flat for the year as a whole, growth in the second half was an impressive 22 per cent.”

ABF shares fell 1.5 per cent to 820½p yesterday after the company’s cautious comments on its outlook. Its grocery business, which includes Kingsmill bread and Ryvita crispbread, performed better in the second half of the financial year as brands were discounted aggressively to compete with own-label products.

The group also suffered from taking positions in vegetable oil markets in an effort to control costs at its Mazola and Capullo brands after prices rose sharply. When the price of vegetable oil fell back drastically, ABF lost £20 million.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive