Associated British Foods Shares Slide as Sugar Woes Overshadow Resilient Primark Update

Shares in Associated British Foods (LON: ABF) fell sharply on Wednesday after the FTSE 100 conglomerate warned that its Sugar division faces a deepening loss, overshadowing an otherwise steady third-quarter trading update.

In a statement released before markets opened, ABF said the prolonged Middle East conflict has driven up gas price expectations for next year, squeezing its European sugar operations.

The group now expects Sugar to post an adjusted operating loss of between £25 million and £60 million for the 2026 financial year — a significant deterioration from prior expectations — with management warning of a further decline in 2027 profitability.

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Onerous energy contracts, a possible devaluation of the Malawian kwacha, and a slow ramp-up at its new Tanzanian factory were cited as key risks.

The gloomy sugar outlook overshadowed a broadly resilient performance elsewhere in the group. Primark, ABF’s clothing retail arm, grew total sales 3% in the quarter, though like-for-like sales fell 2.2%, weighed down by weak consumer confidence across continental Europe, where like-for-like sales dropped 3.6%.

The UK proved more resilient, with Primark gaining market share despite a broader market decline, while US sales jumped 16% on new store openings, including its first Manhattan location.

Grocery and Ingredients delivered solid, in-line growth, and ABF reaffirmed guidance for those divisions, as well as its planned demerger of the Retail business, still on track by the end of 2027.

Still, investors appeared focused on the sugar setback and cautious commentary on 2027, alongside continued softness in European Primark sales, sending shares lower in early trading.