Shares in Associated British Foods (ABF.L) fell on Wednesday morning after the British food and retail group reaffirmed its expectation of a lower profit for fiscal 2026, citing a challenging consumer environment and difficult market conditions for its sugar division.
In its fiscal third-quarter trading update published the same day, the company said it continues to expect group adjusted operating profit and adjusted EPS for the full year to be lower than the previous year.
Group revenue rose 3% year over year to 5.3 billion pounds sterling for the third quarter. The largest revenue contributions came from retail and grocery, which grew 4% and 5%, respectively. Ingredients and sugar segments increased 7% and 4%, respectively, while agriculture revenue declined 13% on a year-over-year basis.
Chief Executive George Weston said, "The Group delivered a resilient trading performance in the third quarter. While the retail environment remained challenging in most markets, Primark continued to strengthen its customer proposition, including new product launches, a sharper focus on price and increased investment in marketing, particularly digital."
Primark, which the company plans to demerge, recorded a 3% annual sales growth in the third quarter. The group reiterated guidance for Primark to deliver an adjusted operating profit margin for the full year of 10%.
Meanwhile, the sugar business is expected to post a loss due to deteriorating market conditions, including the prolonged and severe conflict in the Middle East and lower average selling prices in Europe.
The sugar segment is expected to report an adjusted operating loss of between 25 million pounds and 60 million pounds in fiscal 2026. For the next fiscal year, the company expects a further deterioration in the division's performance, with operating losses likely to exceed the upper end of the projected loss for 2026.
Associated British Foods shares were down 2% in early morning trading in London.
