LONDON, Nov 3 (Reuters) - Associated British Foods on Tuesday forecast another year of lower profits after reporting a 14% fall in earnings for 2025/26, pressured by deepening losses in its sugar business and lower underlying sales at its Primark fashion chain.
The FTSE 100 group, which plans to demerge Primark from its food businesses next year, said it remained cautious on consumer sentiment as well as the impact of inflation and higher energy costs on its businesses.
It said adjusted operating profit in the year to September 2027 would be below the £1.51 billion ($2.02 billion) reported in 2025/26, largely due to sugar losses that could widen to as much as £170 million.
"Any consumer facing business is trading with the reality of consumers whose spending power is reduced," CEO George Weston told Reuters.
Shares in the group were down 3.1%, extending losses this year to 11.5%.
AB Foods said work on the demerger was progressing well and remained on track for completion in December 2027.
"Of course we would like sparkling results going into the demerger and I think there is a chance that the world will be looking better," Weston said. "I can't believe that these (current) gas prices are going to be in place in a year's time."
He also told Reuters that Primark would start offering home delivery in Britain before the demerger.
Group revenue fell 1% at constant currencies to £19.58 billion in 2025/26.
Primark's adjusted operating profit fell 12% to £1.0 billion as like-for-like sales declined 2.6%, while grocery profit dropped 11%, mainly due to weaker earnings from its US oils business.
Sugar losses widened to £47 million, reflecting lower average selling prices in Europe. AB Foods expects losses of £70 million to £170 million in 2026/27.
Primark's adjusted operating margin is forecast at about 10% versus 10.2% in 2025/26. The retailer expects store expansions in Europe, the US and franchise markets to contribute around 4% to sales growth.
Profit in the grocery division, which includes Twinings teas, Ovaltine drinks and Ryvita crispbreads, is expected to be broadly unchanged from 2025/26.
(Reporting by James Davey. Editing by Kate Holton and Mark Potter)