AB Foods keeps annual guidance for Primark/Penneys unit but cuts sugar outlook

RTÉ News​

29-04-2025

Associated British Foods has today reported a 10% fall in first-half profit, hurt by a loss in its sugar division, sending its shares lower in London trading.
The group however kept its guidance for "low single digit" annual growth at its Primark/Penneys clothing unit, driven by new stores in continental Europe and the US, offsetting weaker sales in the UK and Ireland.
First half sales at Primark, whose boss Paul Marchant resignedl ast month over inappropriate behaviour, rose 1% to £4.5 billion.
"While we continue to assume our trading in the UK remains challenging in H2 2025, there have been some early signs of improvement in recent weeks," the company said.
AB Foods said it expected its sugar business to make a full-year adjusted operating loss of up to £40m, reflecting persistent low European sugar prices, a loss at its UK bioethanol business, Vivergo, and challenges in Tanzania and South Africa.
It said it was close to completing a review of its Spanish sugar business Azucarera, and it was considering mothballing or closing the Vivergo plant unless there were changes to UK bioethanol regulations.
The group maintained guidance for its grocery, ingredients and agriculture businesses.
It said adjusted operating profit, its preferred profit measure, was £835m in the six months to March 1, on flat revenue of £9.5 billion on a constant currency basis.
Shares in AB Foods fell 8%, wiping out most of the 10% gain recorded so far this year.
Primark committed to US expansion despite tariff uncertainty, says boss
Meanwhile, Associated British Foods' Primark clothing retail business is committed to expanding in the US despite President Donald Trump's erratic approach to tariffs, its boss said today.
Primark's US business accounts for about 5% of the unit's total sales. It currently trades from 29 stores in the US and has signed an additional 18 leases.
Trump's stream of tariff announcements, roll-backs and exemptions has left some firms wary of committing to expansion.
However, AB Foods chief executive George Weston said Primark was "absolutely" committed to a plan to have 60 US stores by 2026 and remains confident it can succeed in a market that has been a graveyard for some of Britain's biggest retailers, including Marks & Spencer and Tesco.
Weston told Reuters in an interview that Primark would take the "(tariff) hits where we have to take them and before we take more substantive actions wait to see where we really are."
But he said Primark could benefit from Trump's move to end the "de minimis" duty exemption, which allows shipments worth less than $800 duty-free entry to the US and has helped companies like Shein keep prices low.
"De minimis imports in the US are very, very large, they supply a lot of Americans who don't know about Primark yet but are looking for value," he said.
"With prices going up from this part of the trade, I wonder if some Americans might start going back to shopping centres to find value there," he added.