AB Foods posts 14% profit drop on Primark woes, forecasts profit decline in 2027

Associated British Foods (AB Foods) reported a 14% decline in adjusted operating profit for its fiscal year ending September 12, 2026, at £1.508 billion, compared to the previous year. This drop was primarily attributed to challenges faced by its Primark retail division and lower sugar prices in Europe. Group revenue also saw a slight decline of 1%, reaching £19.58 billion on a constant currency basis.

Adjusted profit before tax fell 14% year-over-year to £1.46 billion, and adjusted earnings per share decreased 11% to 156.0 pence. Primark's sales grew by 2% to £9.8 billion, but its adjusted operating profit fell 12% to £1.0 billion, with operating margins contracting to 10.2% due to increased investment in marketing and digital initiatives.

U.K. like-for-like sales rose by 0.5%, while European like-for-like sales fell 4.7% in a challenging trading environment. CEO George Weston acknowledged the challenging operating environment and macroeconomic headwinds, emphasizing the company's focus on controlling what it could and making strategic progress. The Sugar segment posted a loss of £47 million, mainly due to lower prices in Europe, while grocery and ingredients saw profit declines of 11% and 8%, respectively, due to lower demand in the U.S. market.

For fiscal 2027, AB Foods expects adjusted operating profit and earnings per share to be below 2026 levels, primarily driven by the Sugar segment, which is projected to incur an adjusted operating loss ranging from £70 million to £170 million. Despite these challenges, the company remains on track to complete the demerger of Primark from its food business by December 2027.