Associated British Foods profit falls 14% on sugar

Primark’s sales rose 4% to £9.8 billion, helped by new stores in Europe, the US and the Middle East, but like-for-like sales fell 2.6% as shoppers remained cautious. The company said the UK improved after price cuts lifted its value perception, while Europe is still at an “earlier” stage of recovery amid particularly weak consumer sentiment.

The profit picture was also pressured by AB Foods’ sugar business, which the company said is likely to keep weighing on earnings next year. That adds a second drag on a group that also owns grocery brands including Twinings, where hotter-than-usual weather hurt tea demand in the UK and France.

Chief executive George Weston said the group remains focused on capital investment and growth, but repeated the warning that it is “cautious” about consumer sentiment and commodity costs. AB Foods is still targeting a Primark demerger via stock market listing by December 2027, a move that would split the retailer from the food business and give investors a cleaner play on each.

For investors, the message is that Primark’s scale and store expansion are still generating revenue, but margins remain exposed to inflation and a hesitant consumer. The next catalyst is whether the retailer can keep improving value perception and traffic into the new financial year while AB Foods navigates another year of pressure in sugar.