Ikea announced it had paid out hundreds of millions of euros in bonuses to its staff last year after growth in China and recovery in its European markets boosted sales.

The Swedish group famed for its flat-pack furniture and meatballs said that sales grew in most of its markets in 2014, but profits were flat after a big payout to staff.

Ikea contributed €200m (£150m) to a staff loyalty scheme, and a growing number of employees took part in a bonus scheme, for which it booked a €98m cost.

The company, which has 338 stores worldwide, reported net profits of €3.3bn in the 12 months to the end of August.

Peter Agnefjäll, the chief executive, said: “In the past year, we grew in almost all our markets, with China, Russia and Hungary being the fastest growing.” Ikea has been opening new stores in China to take advantage of the country’s rising middle-class.

Agnefjäll added: “North America performed well and while the challenging economic situation may not be over, Europe continued to show improvements. An especially positive sign was the growth in most of southern Europe.” Its business in Portugal did particularly well and the situation in Spain is improving, Agnefjäll said, despite those being two of the worst hit economies during the depths of the eurozone crisis.

Ikea’s largest markets for sales last year were Germany, the US, France, Russia, and the UK, and the chain opened in Croatia for the first time.

Like-for-like sales, which strip out the impact of stores open for less than a year, grew by 3.7%, while total sales in local currencies increased by 5.9% to €28.7bn.

In a separate section in the retailer’s review of 2014, Ikea said it pays corporate and income taxes “in accordance with laws and regulations, wherever we are present as retailer, manufacturer or in any other role”. It paid corporate taxes of €801m in 2014, as well as other property and business taxes, custom duties, and environmental taxes totaling €715m.