Primark-owner AB Foods forecasts further profit decline as sugar losses deepen

AB Foods Sees Deeper Profit Decline Amid Sugar Losses and Primark Weakness

AB Foods Financial Performance and Outlook

By James Davey

Profit Forecast and Recent Results

LONDON, Nov 3 (Reuters) - Associated British Foods on Tuesday forecast another profit decline this year after reporting a 14% fall in 2025/26, as deeper sugar losses and lower underlying sales at its Primark fashion chain weighed on earnings.

The FTSE 100 group, which confirmed in April it would demerge Primark from its food businesses next year, made adjusted operating profit of £1.508 billion ($2.02 billion) for its year to September 12, 2026, on group revenue down 1% on a constant currency basis to £19.58 billion.

Future Guidance and Market Conditions

"In 2027, the Group is expected to deliver adjusted operating profit and adjusted EPS below 2026, mainly due to Sugar, as previously guided," the group, which also owns grocery, ingredients and agriculture businesses said.

It said it remained cautious on consumer sentiment and also the impact of inflation and higher energy costs on its businesses.

Business Segments Performance

Primark and Demerger Progress

AB Foods said work on the demerger is progressing well and is expected to be completed in December 2027. Its shares are down 15% over the last year.

Primark Financials

In the 2025/26 year, Primark's adjusted operating profit fell 12% to £1.0 billion, as like-for-like sales fell 2.6%, while grocery profit declined 11%, mainly due to lower profit from US oils.

Sugar Division and Outlook

Sugar losses widened to £47 million, mainly due to lower average selling prices in Europe. They are expected to deepen in a range of £70 million to £170 million in 2026/2027.

Future Expectations for 2026/27

For 2026/27, the group also expects Primark's adjusted operating margin to be approximately 10% versus 10.2% in 2025/26. It expects space growth in Europe, the US and franchise markets to contribute around 4% to sales growth.

Grocery Division Outlook

Profit in the grocery division, which includes brands such as Twinings, Ovaltine, Ryvita and Jordans, is expected to be broadly in line with 2025/26.

(Reporting by James Davey; editing by Sarah Young and Kate Holton)