Penneys/Primark owner Associated British Foods has said it expects profits to increase in the next fiscal year despite a weaker British currency hurting margins at its UK stores. It predicts earnings could ultimately benefit after Britain's vote to leave the European Union.

The company said discount fashion retailer Penneys/Primark’s profit margins would suffer from the weaker pound as it buys much of its merchandise in Asia in US dollars and will not raise prices to offset that impact.

However, it said its sugar business would benefit from higher prices and cost cuts, while the weak pound would boost the value of overseas group earnings.

It expects higher adjusted operating profit and adjusted earnings for the 2016/17 fiscal year from September 18th.

AB Foods said it expected changes in legislation and trade agreements after Brexit, particularly in the areas of trade tariffs and UK agricultural policy, to benefit the company.

It said it was engaging with government departments to make sure opportunities and risks were recognised. - (Reuters)