Associated British Foods (LSE:ABF), the diversified food and retail conglomerate, downgraded its Sugar division outlook, now expecting an adjusted operating loss of between £25 million and £60 million for the 2026 financial year.
The deterioration is driven primarily by elevated gas costs in Europe, where the prolonged Middle East conflict has pushed energy price expectations higher, triggering the likelihood of onerous contract provisions for the 2026/27 UK beet crop if current gas prices persist. Lower average European selling prices and volume shortfalls in Africa, caused by rain-related production delays in Tanzania and higher South African sugar imports, compounded the shortfall.
"The duration and severity of the Middle East conflict have increased gas price expectations for next year, which has impacted our European profit outlook," chief executive George Weston said.
Beyond Sugar, full-year guidance is unchanged: group adjusted operating profit and adjusted earnings per share in 2026 are still expected to be below last year.
Primark, which accounts for the largest share of group revenue, delivered third-quarter sales growth of 3% in constant currency, though like-for-like sales fell 2.2%, with the company maintaining its full-year adjusted operating profit margin guidance of approximately 10%. Grocery and Ingredients both posted modest constant-currency revenue growth of 1% and 3% respectively.
ABF also noted that, looking into the 2027 financial year, it currently expects a further deterioration in the Sugar result beyond the upper end of the 2026 range, though it flagged multiple variables that could influence the outcome materially in either direction.
The planned demerger of Primark from ABF's food businesses remains on track to become effective before the end of calendar year 2027.
