Associated British Foods Issues Profit Guidance Downgrade as Trading Headwinds Intensify

Associated British Foods plc (ASBFY.PK, ABF.L) has downwardly revised its profit expectations for fiscal 2026, signaling that adjusted operating profit and adjusted earnings per share will fall short of the previous year’s performance. The pullback reflects deteriorating conditions across multiple business units, with particularly acute pressure mounting in the Grocery and Ingredients divisions.

In its latest trading statement covering the initial 16 weeks of the financial period through January 3, the retail and food conglomerate disclosed that Group revenue inched up just 1% on a reported basis year-over-year, though this figure masks underlying weakness when adjusted for currency fluctuations, which showed a 1% contraction.

Mixed Divisional Performance Masks Broader Challenges

The company’s varied performance across business segments illustrates the uneven nature of current market conditions. The Retail segment managed to post a 4% revenue advance, while the Grocery arm held flat. However, these gains were more than offset by headwinds elsewhere: the Ingredients division contracted 3%, Sugar declined 2%, and Agriculture fell 4% year-over-year.

Primark, the group’s flagship fashion retailer, encountered a notably difficult start to the year. British operations saw approximately 3% sales growth, but like-for-like expansion slowed to around 1.7%—a tepid result in an increasingly competitive apparel market where festive-season demand proved lackluster. The overall sales trajectory came in below management’s initial projections.

Revised Profitability Outlook Points to Persistent Pressures

For the first half of 2026, the company now forecasts that Primark’s sales growth will decelerate to low single-digit territory. Under a scenario where current sales momentum persists into the second half, adjusted operating profit margin for the division is projected to stabilize near 10%—roughly equivalent to first-half performance—rather than the previously anticipated slight decline from prior-year underlying levels.

The Grocery and Ingredients segments present more concerning outlooks. Both are now expected to deliver adjusted operating profit moderately below 2025 levels, a meaningful pullback from earlier expectations that anticipated performance roughly in line with the preceding year. Agricultural operations are anticipated to maintain profitability aligned with 2025 results, while Sugar is forecast to show margin improvement, and management anticipates a modest adjusted operating profit contribution from its restructured operations in 2026.

Navigating Near-Term Uncertainty

Despite headwinds that the company expects to persist in the near term, management remains steadfast in its confidence regarding the Group’s longer-term strategic positioning and growth trajectory. ABF is scheduled to release comprehensive revenue figures by business segment for the 16-week trading window on January 22.