ABF has warned that its sugar business’ losses may hit £170m next year, as high gas prices, a poor beet crop and “onerous contract provisions” from low European sugar prices put sustained pressure on margins.
A fourth-quarter trading update to investors this morning also told of a slide in Primark sales and blows to its Grocery division sales, as Twinings sales fell during the heatwave and its Hovis integration impacted operations.
Sugar losses for the year to 12 September 2026 will now hit the higher end of the £25m to £60m range guided in early July.
Now, further deterioration in the Malawian currency, continued disruption in the Middle East, oversupply in the European market and adverse weather in an anticipated record El Niño may all squeeze ABF’s bottom line further in 2027 – though CEO George Weston was upbeat about a recent rise in pricing that “should benefit future years”.
ABF said it expected Grocery sales to have grown “mid-single digits” in the fourth quarter, for which it will report its full results in November. Operating profit in the division is expected to be slightly lower for the full year thanks to the slump in Twinings and lower Ovaltine sales in Thailand.
Primark’s like-for-like sales were down 3% in the quarter, with full-year sales suffering a 2.6% drop. The full-year fall in sales came largely from a 4.7% slump in continental Europe, where the largest part of the chain’s sales are made. UK and Ireland sales were steady, growing 0.5% in the year.
The business today announced it will finally offer home delivery in the UK, as the company acts “at pace” to strengthen its customer proposition, according to ABF CEO George Weston.
The Primark spin-out is “progressing well”, according to ABF, and is expected to be completed in December 2027.
“Our priority focus areas, the UK and womenswear, continued to outperform our other markets and categories. Trading in continental Europe remained challenging, where actions to strengthen our customer proposition are at an earlier stage.”
ABF’s ingredients division saw a strong end to the year with a 10% bump to revenues, with its yeast and bakery ingredients business AB Mauri delivering “good growth” across most markets.
“Across the Group, we continued to take actions and make strategic capital investments to drive performance,” said Weston.
“On top of the integration of Hovis Bakeries, we announced the restructuring of our UK Sugar and Agriculture businesses and completed multi-year capital projects. A sharp focus on operational performance across the Group reinforces our confidence in the Group’s long-term growth prospects.”
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