AB Foods Share Price (ABF)

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Associated British Foods delivered a mixed third quarter overshadowed by a material downgrade to its Sugar division, which now faces an expected adjusted operating loss of between £25m and £60m in FY2026, up from prior guidance and with a further deterioration flagged for FY2027. Group revenue rose 3% at actual rates to £5.30bn in Q3, though flat in constant currency, and management reiterated that full-year adjusted operating profit and adjusted EPS will fall below last year. Primark, the strategic centrepiece ahead of its planned demerger by end-2027, grew sales 3% but posted a like-for-like decline of 2.2%, with continental European like-for-likes down 3.6% amid weak consumer confidence and the drag from Middle East tensions on sentiment; UK trading firmed into June and US sales jumped 16% on new store openings including the first Manhattan location. Grocery revenue rose 1% with Twinings performing strongly, and the CMA-cleared Hovis acquisition adds synergy potential in bakeries. Ingredients grew 3%, while Agriculture fell 14% on weaker compound feed volumes. Elevated European gas costs tied to the Middle East conflict are the crux of the Sugar problem, likely triggering onerous contract recognition and prompting further cost action in Europe. Aside from Sugar, full-year guidance is unchanged. The demerger remains on track, and management's near-term focus will centre on stabilising Sugar economics and re-energising Primark's like-for-like trajectory heading into autumn/winter.

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There are very many price reductions currently, so clearly there is a lot of overstocking. Hopefully the hot weather with stimulate Summer clothing sales and it just reflects the normal ups and downs of trading. The stores remain well invested and are generally much more attractive than M&S, so I remain optimistic.

This has got legs to have a little move up from here IMO.

I just don't see a future for primark in the current economic climate, they seem to have increased prices and costs, more competition and lower footfall.

How does the rest of the business look to stack up

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ABF’s first half was soft, but broadly in line with management’s expectations, with the major negative surprise coming from Sugar. Group revenue was broadly flat at £9.47bn, while adjusted operating profit fell 18% to £691m and adjusted EPS declined 15% to 70.7p. The key point is that profit weakness was not driven by a collapse in the core model, but by a difficult first-half phasing, heavy investment, and acute pressure in Sugar. Primark was mixed but strategically more encouraging than the headline margin decline suggests. Sales grew 2%, helped by new space, while UK like-for-like sales rose 1.3% and market share improved, indicating that recent action on price perception, product, marketing and digital engagement is working in its most important market. Europe remained soft, with like-for-like sales down 5.6%, showing...

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