Associated British Foods (ABF), the conglomerate behind Primark and various food brands, has issued a cautionary statement regarding its sugar division’s performance in the upcoming financial year. The company anticipates a significant decline in operating profits for its sugar business, projecting between £50 million and £75 million for the 2025 financial year, a stark contrast to the approximately £200 million expected for the current year ending 14 September.
The downturn in sugar profits is attributed to increased supplies and falling European sugar prices. ABF, a major producer of cane sugar and sugar beet with brands such as Azucarera, Illovo, White Spoon, and British Sugar, faces challenges in this sector of its diverse portfolio. Despite the sugar setback, ABF reports positive news from its retail arm.
Primark is set to achieve revenue growth of about 4 per cent in the second half of the year, overcoming a 0.5 per cent dip in UK sales following a disappointing summer. George Weston, the company’s chief executive, commented on the retail performance, stating, “While the British weather was not in Primark’s favour this summer, robust growth in other markets and new store openings have driven good sales overall.
” The market reacted swiftly to the news, with ABF shares falling 139p, or 5.6 per cent, to £23.62 in lunchtime trading. This decline comes after a 21 per cent rise in share value over the past year prior to this week’s announcement. In a move to bolster investor confidence, ABF has announced plans for a £100 million share buyback. The FTSE 100 company, which operates in 50 countries and is controlled by the billionaire Weston family, maintains an optimistic outlook for the group’s overall performance, emphasising its position for further strategic progress and continued reinvestment for long-term growth.
ABF’s diverse portfolio, which includes brands such as Kingsmill bread, Ryvita crackers, and Twinings tea, underscores the company’s resilience in the face of sector-specific challenges. As the sugar industry grapples with price fluctuations, ABF’s retail and other food divisions appear poised to help balance the company’s overall financial performance.
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