Associated British Foods Sees Sales Decline

Shares in Associated British Foods (LON:ABF) fell during London trading on Thursday after the company announced expectations of a 2% decline in like-for-like UK sales at Primark for the second half of the year compared to last year.

Trading Update

In their trading update, AB Foods reported a 0.6% decline in third-quarter like-for-like sales and projected a 3.1% decrease for the fourth quarter. The decline in foot traffic at Primark was attributed to challenging weather conditions, particularly in April and June.

Analyst Insights

RBC Capital Markets analysts noted that the expected decrease in Primark’s sales was slightly worse than anticipated. However, they highlighted Primark’s potential for a strong expansion in both Europe and the US, emphasizing its status as a leading value player in the UK retail sector.

Sugar Business Concerns

AB Foods CEO George Weston expressed concerns over the profitability of the sugar business, indicating it has fallen short of previous expectations due to a significant drop in European sugar prices. He predicted this trend would affect profits for the sugar division in the 2025 fiscal year, with hopes for recovery in FY2026.

The sugar unit is estimated to deliver an adjusted operating profit of approximately £200 million for the current financial year and between £50 million to £75 million for the following year. The RBC analysts described this forecast as “materially lower.”

AB Foods is expected to release its preliminary results for the 52-week period on November 5.