Associated British Foods PLC (LSE:ABF) dropped to the bottom of the FTSE 100 on Wednesday after warning that weaker sugar trading would weigh heavily on full-year profits.
The company said its overall full-year outlook remained “unchanged,” but sugar is now expected to generate an adjusted operating loss of between £25 million and £60 million.
Lower European sugar prices, higher gas costs linked to the Middle East conflict, and uncertainty across Africa were all cited as factors behind the worsening sugar performance.
Primark, the discount fashion chain owned by ABF, recorded a 2.2% decline in like-for-like sales during the 16 weeks to 20 June, a disappointing result in most of its core markets.
Total Primark sales rose 4% to £2.9 billion, however, with new store openings contributing 5% to growth and currency movements also playing a role.
UK like-for-like sales were broadly flat while total UK sales climbed 1%, with management pointing to improved June weather and increased marketing investment, including the launch of a new app.
Continental Europe proved more difficult, with sales falling 1% and like-for-like sales dropping 3.6%, while the United States delivered a 16% sales increase supported by three new store openings, including Primark’s first Manhattan location.
Chief executive George Weston described it as a “resilient trading performance,” acknowledging the retail environment “remained challenging in most markets” but highlighting new product launches and a “sharper focus” on price.
Group revenue reached £5.3 billion in the quarter, up 3% at actual exchange rates but flat on a constant currency basis, as Grocery sales rose 5% to £1.04 billion.
ABF confirmed that the planned demerger of Primark from its food business remains on track for completion before the end of the 2027 calendar year.
Shares fell 2.4% to 1,938p, leaving the stock down around 10% since the start of the year, as investors reacted to the sugar profit warning.
Broker Jefferies described it as a “mixed Q3,” characterising Primark’s headline figures as an “optically-better” performance that was likely flattered by quarterly timing.
Analysts noted that Primark benefited from a strong March before weaker April and May trading, with better weather in June helping to recover some ground.
Like-for-like sales came in above the wider City consensus, but Jefferies said this did “not … necessarily” imply a better full-year outcome than the market currently expects.
The broker warned that sugar downgrades were likely to be the “dominant factor,” cutting approximately 2% from the 2026 financial year group EBIT and around 4% from 2027 at the midpoint of the new sugar loss guidance range.