ABF Trading Update: Resilient Performance Despite Challenges, Sugar Outlook Weighs on Results

Associated British Foods has served up a mixed third-quarter update. The headline is that most of the group is holding up reasonably well, especially Primark, Grocery and Ingredients, but Sugar has taken a clear turn for the worse and is now the big problem child.

That matters because ABF is a broad church. When one division wobbles, another can usually steady the ship. This time, that still looks true at group level – but Sugar is wobbling hard enough to drag down sentiment.

Associated British Foods Q3 2026 trading update: the key numbers investors need to know

Division	Q3 2026 revenue	Q3 constant currency growth	YTD 2026 revenue	YTD constant currency growth
Retail	£2,920 million	+3%	£7,577 million	+2%
Grocery	£1,043 million	+1%	£3,115 million	In line
Ingredients	£543 million	+3%	£1,546 million	In line
Sugar	£451 million	(4)%	£1,422 million	(8)%
Agriculture	£347 million	(14)%	£1,105 million	(10)%
Group	£5,304 million	In line	£14,774 million	(1)%

Constant currency means stripping out exchange-rate movements, which gives a cleaner read on underlying trading. On that basis, group revenue was flat in the quarter and down 1% year to date, so this was not a blowout update. It was more a story of resilience in some areas and genuine pressure in others.

Primark Q3 sales growth looks decent, but like-for-like weakness still needs fixing

Primark grew sales by 3% in the quarter, with new stores contributing 5% to growth. The snag is that like-for-like sales – sales from existing stores – fell 2.2%. So the top line improved, but mostly because Primark added selling space rather than because shoppers spent more in established shops.

That is not disastrous, but it is not fully convincing either. If you are looking for a clean consumer recovery at Primark, this update does not quite give you that.

UK market share gains are encouraging for Primark

There were some positives. In the UK, Primark delivered 1% sales growth in Q3, with like-for-like sales broadly flat at (0.1)%. ABF said Primark gained market share in a declining market, which is a good sign because it suggests the brand is winning customers even when the backdrop is tough.

ABF also pointed to a stronger June after weaker April and May, helped by better weather. That may sound small, but for a clothing retailer weather can move the needle quite a bit.

Europe remains the soft spot, while the US is growing fast

Continental Europe was weaker. Sales fell 1% and like-for-like sales dropped 3.6%, which tells you consumer confidence is still shaky there. ABF is responding with sharper pricing, better in-store execution and more digital marketing, but the numbers show there is still work to do.

The US was the brighter spot, with sales up 16% and three new store openings taking the estate to 41. The first Manhattan store opened in May and has started strongly, which is encouraging because flagship locations can help build brand awareness quickly.

Management kept Primark guidance unchanged and still expects an adjusted operating profit margin of about 10% for the full year. That feels reassuring. Even so, the market will want to see like-for-like sales improve, because new store growth can only carry the story so far.

ABF Grocery and Ingredients provide the steady support investors like to see

Grocery was solid rather than spectacular. Revenue rose 1% in Q3, helped by Twinings and a recovery at Ovaltine after last year’s cocoa-related disruption. The weaker bit was US oils, where lower spending by ABF’s core Hispanic consumer continued to weigh.

There was also a strategic update here. The Competition and Markets Authority has approved ABF’s acquisition of Hovis Group Limited, and ABF expects cost synergies from combining Hovis with Allied Bakeries. In plain English, synergies are the savings a company hopes to make by bringing two businesses together.

Ingredients also did its job, with revenue up 3% in Q3. AB Mauri delivered a solid performance across most markets, while ABFI, the speciality ingredients portfolio, continued to grow. No fireworks, but steady performers like these matter when another division is under pressure.

My read is simple: Grocery and Ingredients are acting like ballast. They are not likely to drive a major re-rating on their own, but they do help keep the wider investment case intact.

ABF Sugar outlook downgrade is the real story and the main risk for shareholders

This is where the mood changes. Sugar sales declined 4% in Q3 at constant currency, reflecting lower average selling prices in Europe and weaker African volumes due to rain-related production delays in Tanzania and higher imports in South Africa.

More importantly, the profit outlook has worsened. ABF now expects Sugar to deliver an adjusted operating loss of between £25 million and £60 million in 2026.

Why the Sugar division has deteriorated

The big issue is energy. ABF said the duration and severity of the Middle East conflict have pushed up gas price expectations for next year, hurting the European sugar profit outlook. If these conditions persist, ABF expects to recognise onerous contracts in 2026 – meaning contracts that are expected to become loss-making.

The loss range also depends on other moving parts. The lower end assumes no devaluation of the Malawian kwacha and a good ramp-up at the new Tanzania factory. The upper end assumes gas costs stay around current levels, the Malawian kwacha devalues and Tanzania ramps up more slowly.

Worse still, ABF said its current expectation for 2027 is a further deterioration from the £60 million loss at the upper end of the 2026 range. That is the kind of forward-looking comment investors cannot ignore.

In my view, this is the clearest negative in the whole update. Sugar is no longer just a weak division. It is becoming a serious drag with uncertainty stretching into next year as well.

Agriculture remains under pressure, but this is a smaller issue than Sugar

Agriculture revenue fell 14% in Q3 due to lower compound feed sales. ABF is responding by cutting costs and sold one of its nine UK compound feed mills in the period. Its speciality feed and additives businesses did grow, which softens the blow.

This is not ideal, but it does not look like the main market-moving issue here. Compared with Sugar, Agriculture feels more manageable.

ABF full-year outlook and demerger plans: why the bigger picture still matters

ABF said its full-year outlook is unchanged, except for Sugar. The group still expects adjusted operating profit and adjusted EPS, or adjusted earnings per share, to be below last year.

The demerger plan is still on track too. ABF continues to expect the separation of its Retail business from its Food business to become effective before the end of the 2027 calendar year.

That matters because demergers can make businesses easier to value. Primark and the food operations have very different drivers, and Sugar’s volatility can muddy the picture. A split could eventually give investors a cleaner choice, though the RNS does not provide any new financial detail on how that separation will work.

What this ABF trading update means for retail investors

This was not a disaster update, but it was not cleanly positive either. Primark is improving parts of its customer offer, Grocery and Ingredients are dependable, and the demerger remains on track. Those are all useful supports.

But Sugar has become a much bigger headache, and ABF is telling the market quite plainly that 2027 could be worse. For me, that keeps a lid on near-term excitement around the shares. The group looks resilient, but the Sugar downgrade is serious enough to matter.

If you already own ABF, the core case is still intact, just messier. If you are watching from the sidelines, this update says the same thing in plain terms: good businesses are still performing, but Sugar is the reason the market may stay cautious.