FTSE 100 giant Associated British Foods has issued a major warning on the state of its sugar businesses over “the duration and severity of the Middle East conflict”. The multinational conglomerate – which spans across the food and retail industry – said it expects its sugar operation to deliver a
Samuel Norman
Wednesday 01 July 2026 7:27 am | Updated: Wednesday 01 July 2026 8:17 am
FTSE 100 giant Associated British Foods has issued a major warning on the state of its sugar businesses over “the duration and severity of the Middle East conflict”.
The multinational conglomerate – which spans across the food and retail industry – said it expects its sugar operation to deliver a loss of as much as £60m for the financial year.
Shares in the firm were down 2.4 per cent as investors digested the news, taking its stock price to 1,935.00p.
Associated British Foods (ABF) is one of the world’s largest sugar producers, with 21 plants across nine countries.
It pointed to the war between US and Iran, which “increased gas price expectations for next year” and “impacted our European profit outlook”.
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“While there has not yet been an upward inflection in European sugar prices, gas costs are significantly higher,” it added.
European gas prices surged as much as 40 per cent in a single day at the height of the conflict after Iranian attacks shut down the world’s largest export plant for liquified natural gas in Qatar.
ABF warned it did not expect an uptick in 2027 with “further deterioration” pencilled in for the sugar segment.
It added: “We expect to take further action to lower our cost base going forward, particularly in Europe”.
Europe and the UK make up roughly 50 per cent of ABF’s total sugar revenue, driven by British Sugar (the sole processor of the UK sugar beet crop) and Azucarera (a top producer in Spain and Portugal).
Primark gears up to go it alone
In its retail division, ABF said sales at Primark grew three per cent in the third quarter, driven by a wave of shopping at new stores.
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But like-for-like sales – which are comparable with the same amount of store units as the previous period – fell 2.2 per cent.
Continental Europe was the weakest link with sales sliding 3.6 per cent, whilst the UK was flat.
ABF said Primark was continuing to gain market share in a declining UK clothing market, even as it blamed a “weaker April and May” for wiping out the momentum of a strong March after unseasonal weather and the Middle East conflict dampened sentiment.
In the US, Primark sales were up 16 per cent, bolstered by opening the doors to its first store in Manhattan that helped spring its footprint across the pond to 41 stores.
“ABF’s latest trading update is a tale of two businesses moving in opposite directions,” Mark Crouch, market analyst at eToro, said.
He added much of Primark’s momentum was being “overshadowed” by sugar.
“The warning that trading could deteriorate further in 2027 suggests these challenges are becoming more structural than cyclical.”
In April, ABF confirmed plans to spin off the clothes retailer in a move that is expected to leave both firms separately listed on the FTSE 100 index.
ABF enlisted Rothschild & Co last year to help it carry out a “strategic” review to weigh up whether to offload the retailer.
The firm said it is “confident” in the prospects of both businesses, and chief executive George Weston said the move is an “important step in the evolution” of the group.
Read more Government warned ‘unworkable’ new healthy food rules will backfire
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