Associated British Foods (ABF) has cut expectations for its sugar division after a fall in Q3 sales and deeper losses expected for the year ahead.

The conglomerate company's third-quarter revenue was relatively flat at £5.3bn at constant currency, with growth in Primark, Grocery and Ingredients offset by weaker performances in sugar and agriculture.

Sugar remained the key pressure point. Sales fell 4% in the quarter and the sugar division is now expected to report a wider full-year loss of between £25m and £60m on lower average selling prices.

ABF blamed the weakened profit outlook on the "the duration and severity" of the Middle East conflict, which have increased gas price expectations for next year, as well as operational challenges in Africa. A further deterioration of the business is anticipated in 2027.

Agriculture revenue also remained a sour note, falling 14% as lower compound feed volumes continued to weigh on performance.

Primark sales increased 3% in the quarter, driven by new store openings across Europe, the US and the Middle East, although like-for-like sales declined 2.2%.

UK sales rose 1% with market share gains despite weaker consumer sentiment and unseasonal weather in April and May. The US remained a bright spot, with sales up 16% and the opening of Primark’s first Manhattan store.

ABF said it remained on track to complete the planned demerger of Primark from its food business before the end of 2027.

Elsewhere, grocery revenue grew 1%, supported by Twinings and a recovery at Ovaltine, while ingredients revenue increased 3%.

Group adjusted operating profit and adjusted earnings in 2026 are expected to come in below last year.

ABF CEO George Weston said: “The Group delivered a resilient trading performance in the third quarter. Aside from Sugar, our full year outlook for the Group is unchanged."

Shares of the FTSE-100 listed company were down roughly 3.5% to 4.3% on today's trading update.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, commented: "ABF hasn’t done much to whet investors’ appetite. The group’s crown jewel, Primark, posted modest 3% growth over the period, despite a challenging retail environment across most of its markets, especially in Europe. However, Primark’s growth was driven entirely by new store openings. Stripping these out, Primark’s like-for-like sales fell by 2.2% over the period."

“All this doesn’t bode too well for the food business which will soon have to stand on its own two feet once the Primark demerger completes," added Victoria Scholar, head of investment at interactive investor. "Sugar is the most notable vulnerability in the remaining food business, while grocery appears more resilient with support from key trusted household brands like Twinings. ABF’s retail business will also face challenges of its own post demerger with intense competition in fast fashion and its weak online presence."

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