Associated British Foods (ABF) has reported a 10% year-on-year fall in adjusted operating profit to £835m in its first half, as its sugar division recorded an operating loss.

In the 24 weeks to 1 March 2025, revenue at the food processing and retailing company remained flat year-on-year at £9.5bn in constant currency.

ABF recorded growth in its retail and ingredients divisions, but this was offset by a decline in its sugar division, which was a result of lower European sugar prices and an operating loss in its UK bioethanol brand, Vivergo.

In this period, the company, which owns brands including Primark, Twinings and Ryvita, saw its profit before tax also drop by 21% to £692m.

Furthermore, its earning per share dropped by 8% to 83.6 pence, although this was "benefitting from the accretive impact of share buybacks", ABF said.

ABF has competed £442m in buyback in the year to date, with a further £169m set to be completed in the rest of the financial year.

Chief executive at ABF, George Weston, said: "These results reflect a robust performance in four of our five divisions. I am frustrated with the results in our sugar business, but we are clear on what needs to be done by way of operational and regulatory solutions to improve financial performance.

"Our focus remains on sharp execution of our key growth initiatives across product, brand, digital and new market entry. Our grocery and ingredients businesses performed well and the outlook remains positive."

In its outlook, ABF said that its guidance for the current financial year remains unchanged, despite reflecting on the absorption of a US tariff impact in the second half.

However, it said that with "persistent low European sugar prices" and the performance of Vivergo, it expects its sugar division to record an operating loss of up to £40m.

Manager of the quality shares portfolio at Wealth Club, Charlie Huggins, commented: "There is not much to celebrate in these results from ABF. The outlook in the sugar business has worsened, primarily due to lower European sugar prices and an operating loss in Vivergo, the UK bioethanol business. Actions are being taken to turn these businesses around. However, the group warns that a return to profitability is likely to take longer than expected.

“There are bright spots in the results. Primark is growing well overseas, with plenty more white space to expand into. And margins in the retail business have grown impressively, demonstrating the power of Primark's operating model. This will be vital in offsetting cost pressures from the Autumn Budget.

“Overall, there is no doubt that ABF faces a challenging environment. But investors will feel it could and should be doing better.”

---