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Associated British Foods PLC on Wednesday said it expects the consumer environment to remain ‘uncertain’, as it reported sluggish sales at Primark, and further struggles at its Sugar business. In response, shares in the London-based company, which owns the fast fashion retailer Primark plus a range of food manufacturing businesses, fell 9.6% to 2,027.00 pence each in London on Wednesday morning. It was the worst performing stock on the FTSE 100 which was up 0.2%. Primark sales growth is expected to be around 1% in the second half of the financial year to September 13 compared to the year prior, below Visible Alpha consensus of 3.4%, with growth of 1% in the third quarter and projected growth of 1% in the fourth quarter. Primark like-for-like sales in the second half are expected to be around 2% below last year, versus VA consensus for a drop of 1%, with a decline of 2.4% in the third quarter and a projected decline of around 2% in the fourth quarter. For the full year in 2025, AB Foods expects Primark’s sales growth to be around 1%, with its store rollout programme continuing to drive sales growth of around 4%. AB Foods said trading at Primark in the UK and Ireland improved sequentially on the first half of the financial year, but it saw a more subdued consumer environment in Europe and trading was weaker, while performance in the US was strong. ‘Looking ahead, we currently expect the consumer environment to remain uncertain,’ the firm added. AB Foods continues to expect retail adjusted operating profit margin for the full year to be broadly in line with 11.7% in the last financial year. But, as expected, adjusted operating margin in the second half will be below the first, mainly due to the phasing of one-off items. AB Foods continues to expect the full year adjusted operating loss for the Sugar business, including its Vivergo bioethanol plant, to be close to £40 million. The company notes the UK government has decided not to provide the solution required for Vivergo to operate on a consistently profitable basis and therefore announced its closure. AB Foods said the operating loss of this business will now be within ’disposed and closed’ operations, not in the Sugar segment. The adjusted operating profit of the Sugar segment is therefore expected to be close to breakeven, and sales are expected to decline by around 10%, worse than the 6% drop forecast by consensus. As expected, sales and profitability in the Sugar businesses in the UK and Spain declined significantly in the second half as a result of persistent low European sugar prices and a high cost of beet. In Spain, restructuring actions to reduce beet manufacturing footprint are underway. AB Foods expects the closure of Vivergo and the actions taken in Spain to result in restructuring costs and impairment charges of around £200 million, of which around £50 million are cash costs which will be incurred in the current financial year and into next year. Grocery sales in the second half are expected to be in line with the prior year, reflecting ‘good growth in our international brands, offset by lower sales in Allied Bakeries and US oils, as expected.’ But AB Foods expects grocery adjusted operating profit in the second half to be slightly below previous expectations, mostly due to one-off restructuring costs. The firm is combining its Allied Bakeries business with Hovis Group Ltd. There was better news in the Ingredients division where sales are expected to be broadly in line with last year with adjusted operating profit slightly ahead of previous expectations. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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