(Bloomberg) -- Associated British Foods Plc warned it will make less profit than expected from its sugar business after international prices dropped, while sales at its retailer Primark were hit by miserable British weather.
Sugar profitability will be lower than guided in its financial year ending this month, and will fall to between £50 million ($65.7 million) and £75 million next year, the company said Thursday. The forecast is about a quarter of the size expected by consensus estimates, according to Bloomberg Intelligence’s Charles Allen.
Shares fell as much as 5.8% when the London market opened, but remain 20% higher than this time last year.
An oversupply of sugar in Europe has knocked prices even more than the company anticipated just two months ago, George Weston, ABF’s chief executive officer, said in an interview. Still, the effect will be short-lived and prices should recover into 2026, he added.
“We’re processing an agricultural commodity,” Weston said. “There’s inevitably volatility in the markets for those sorts of products.”
New York sugar futures have lost 6.5% so far this year and touched the lowest since 2022 in August.
ABF, which also owns fashion retailer Primark, said like-for-like sales at the chain dropped 0.9% in the latest quarter due to unfavorable weather in the UK and Ireland. Primark makes up about two-thirds of ABF’s profits.
“April and June in particular were pretty awful trading trading months,” Weston said. British shoppers are still nervous, he added, citing higher interest rates and potentially the fear of tax rises to come from the UK’s new Labour government.
The company said it completed a £500 million buyback program last month and will purchase a further £100 million of stock in the coming weeks.
--With assistance from Megan Durisin.
(Updates with additional comment from Weston.)
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