Key Takeaways:
Associated British Foods said its sugar division will post a full-year operating loss at the top of its £25 million to £60 million guidance range, and guided to a loss of £70 million to £170 million for 2027, as low European prices forced onerous contract provisions.
"While a number of factors contribute to our negative outlook for Sugar in 2027, the recent positive turn in European and global sugar pricing should benefit future years," the company said in its Q4 2026 trading statement.
The London-listed group, which owns Primark alongside its food businesses, said group adjusted operating profit would be broadly in line with previous guidance and adjusted earnings per share would come in slightly ahead. The sugar hit is compounded by higher gas costs and a poor UK beet crop after a hot, dry summer. ABF is cutting its UK sugar footprint from four sites to three.
The sugar warning drove the shares down about 7% on the day, outweighing the earnings upgrade. Elsewhere in the group, Ingredients sales rose roughly 10% in the quarter on AB Mauri yeast and bakery solutions and ABFI specialty ingredients, while Grocery grew but landed slightly below target as the hot summer curbed demand for Twinings tea and Ovaltine. Agriculture traded ahead of 2025.
Primark, the retail arm that ABF plans to separate from its food operations, said it will begin offering home delivery in Great Britain after acquiring an automated fulfilment centre in Sheffield, building on its click-and-collect rollout. Full-year sales are expected to rise about 2%, but like-for-like sales are set to fall about 2.6%, with a 4.3% decline on the Continent.
"Primark is turning to at-home delivery with like-for-like sales growth from existing stores seemingly stuck in transit," Duncan Ferris, analyst at Freetrade, said. "With investment in price, product, and marketing not yet moving the needle on sales growth, Primark has taken a big leap with the announcement of home delivery."
The demerger of Primark from the food businesses remains on track for completion in December 2027, a timetable ABF confirmed alongside the trading update.
For holders, the numbers set up a split verdict: the food and ingredients side is carrying group earnings while sugar becomes a multi-year drag that management itself expects to widen before it narrows. The £70 million to £170 million 2027 range is wide enough that the eventual outcome depends on whether European pricing holds the turn ABF flagged. Investors will watch the full-year results and the December 2027 demerger timetable for the first hard read on whether the Sheffield fulfilment centre moves Primark's like-for-like trend.
This article is for informational purposes only and does not constitute investment advice.
