Associated British Foods maintains full-year outlook as Primark growth offsets Sugar challenges (ABF)

Primark expansion supports steady third-quarter performance

Associated British Foods (LSE:ABF) reported a resilient third-quarter trading performance, with group revenue broadly unchanged at constant exchange rates as growth in Primark, Ingredients and Grocery helped offset weaker results from its Sugar and Agriculture businesses.

Primark delivered a 3% increase in sales, supported by new store openings across Europe, the United States and the Middle East. However, like-for-like sales declined as consumer demand remained subdued, particularly in continental Europe.

Sugar outlook weakens despite progress across other divisions

The group reaffirmed its full-year guidance for all businesses excluding Sugar. Within the Sugar division, however, higher natural gas costs linked to tensions in the Middle East, together with operational uncertainty in Africa, have led the company to forecast an adjusted operating loss of between £25 million and £60 million for the current financial year.

Associated British Foods said it continues to invest in Primark’s product offering, competitive pricing and digital marketing initiatives, while Grocery and Ingredients delivered steady growth. The company also highlighted continued progress with the acquisition of Hovis, reflecting confidence in its long-term strategy despite ongoing challenges in European sugar operations and softer revenue from Agriculture.

Attractive valuation balanced by cautious earnings outlook

Associated British Foods’ investment outlook reflects generally stable financial performance, although management expects profit and earnings per share to remain below 2025 levels, largely due to the anticipated losses within the Sugar business.

The shares continue to benefit from an attractive valuation, supported by a relatively low price-to-earnings ratio and a solid dividend yield. However, technical indicators remain neutral to slightly negative, suggesting limited momentum in the near term.

More about Associated British Foods

Associated British Foods is an international food, ingredients and retail group whose largest consumer business is value fashion retailer Primark. The company also operates across grocery, sugar, agriculture and specialty ingredients, supplying branded and private-label products to customers in Europe, the UK, the US, Africa and other international markets.