Primark owner Associated British Foods still expects annual profits to come in below last year’s, with its sugar business making losses and trading worsening, and Primark also struggling.
ABF shares fell 2.3% and were among the biggest fallers on the FTSE 100 index, which dipped just under 30 points, or 0.26%.
The group, which unveiled plans in April to spin off the budget clothing chain from its food businesses before the end of 2026, said group revenue on a constant currency basis was flat in its third quarter.
Primark’s revenue increased 3%, but like-for-like sales (at outlets open more than a year) were down 2.2%, reflecting a “challenging” retail environment in most markets.
The company said a strong start to its spring-summer trading in March was followed by weaker trading in April and May, largely due to the impact of the Middle East war on consumer sentiment and unseasonal weather. Improved weather in June, i.e. the heatwave, contributed to stronger trading.
Sales in ABF’s grocery business, which includes well-known brands such as Ovaltine, Ryvita and Twinings, rose 1%. Revenue in the sugar business dropped 4%, reflecting lower average selling prices in Europe, volume declines in Tanzania and the impact of higher imports in South Africa.
ABF said the duration and severity of the Middle East war has increased gas price expectations for next year, which has impacted its European profit outlook for its sugar business.
It now expects an adjusted operating loss for sugar of £25m to £60m in the current financial year and “a further deterioration” in 2026-27. Aside from sugar, its full-year outlook remains unchanged, with group profits seen below the £1.73bn made last year.
The company saide turning around the sugar business is a priority for management, signalling further cost cuts.
We expect to take further action to lower our cost base going forward, particularly in Europe.
