The parent company of Primark has revealed intentions to initiate a share buyback worth £500 million and issue a special dividend following a significant increase in annual profits.

Associated British Foods announced that its pre-tax profits surged to £1.91 billion, a notable rise from £1.34 billion, for the year ending September 14. The company’s adjusted operating profit, a key performance metric, also saw an increase to nearly £2 billion, up from £1.51 billion in the previous year.

Revenues for the FTSE 100 company climbed by 2% to £20 billion, compared to £19.75 billion last year. This growth was fueled by a strong performance in its grocery division, along with the solid results from its Primark clothing operations, despite a downturn in its sugar sector.

The company announced a special dividend of 27p per share in addition to a final dividend of 42.3p per share. Furthermore, it plans to return an extra £500 million to shareholders over the next year.

Chief Executive George Weston remarked, “This year showcased exceptional financial and operational advancements across the group. We realized significant profit enhancements, impressive cash flow, and strong returns stemming from ongoing investments and a return to more stable market and supply chain conditions.”

ABF, overseen by the wealthy Weston family, operates in 55 nations and employs around 133,000 individuals. In addition to Primark, it produces well-known items such as Twinings Tea, Kingsmill bread, and Ryvita crackers.

In terms of profit contribution, the sugar division is approximately 20% the size of Primark. The discount fashion retailer, with around 440 locations globally, generates about two-thirds of ABF’s overall profits.

Grocery sales increased by 4% over the past year, while Primark’s sales rose by 6%, attributed to robust performance in the US, France, Spain, Italy, and Central and Eastern Europe, as well as growth in the UK, which remains its largest market.

Discussing Primark’s performance, Weston stated, “Our low-cost model continues to thrive as we sustain our unwavering commitment to providing high-quality, affordable clothing and a distinctive shopping experience.”

ABF indicated that it anticipates its store expansion strategy will contribute approximately 4% to 5% annually to Primark’s total sales growth in the foreseeable future.

The company highlighted on Tuesday that falling sugar prices in Europe during the fourth quarter are expected to significantly affect performance in its sugar division in 2025, projecting adjusted operating profits for this segment to fall between £50 million and £75 million.

In September, the company had already cautioned that dropping sugar prices in Europe would have a pronounced impact on its upcoming financial performance.

ABF projects that profitability will rebound in 2026, aligning closer to 2024 levels due to lower contracted beet prices and a “rebalancing” of market supply and demand.

Shares of ABF increased by 62p, or 2.7%, to reach £23.51.