A third quarter trading update from Associated British Foods (ABF) shows the Group is seeking to cut costs at both its Agriculture (AB Agri) and Sugar divisions. It is also pursuing its strategy to become a pureplay food business through the divestment of the Primark retail clothing operation, possibly by the end of 2027.
Agriculture revenues declined 14% to £357 million year-on-year in Q3 due to lower sales of compound feed. At the nine- month stage, they were down 9% to £1.11 billion. The company has been affected by a fall in poultry volumes after 2Agriculture’s move to produce more of its requirements in-house through the purchase of two feed mills from ForFarmers. As a result, the division says it is adjusting its cost base accordingly – it is reported to have up to five feed facilities on the market. ABN disposed of one of its nine UK compound feed mills – Cullompton in Devon – during the period.
Elsewhere in the Agriculture division, the business says its speciality feed and additives businesses delivered good growth.
The AB Sugar division, comprising ABF’s sugar refining activities in Europe and Africa, saw a 4% increase in Q3 revenues to £451m. However, sugar sales were down by 4% in the latest quarter due to lower average prices in Europe and lower volumes in Africa due to weather-related production delays.
British Sugar says its first half expectations of lower profitability and revenues from the 2025/26 beet crop are unchanged, now sugar prices, beet costs and energy costs are all known. However, the profitability of the 2026/27 beet crop is more difficult to assess. The significant rise in fuel and energy costs with the Middle East conflict, with no rise in European sugar prices, points towards an adjusted operating loss for Sugar of between £25m -£60m for 2026, and a further deterioration in 2027.
“The performance of our Sugar business continues to be a priority area of focus for management and the board. We expect to take further action to lower our cost base going forward, particularly in Europe,” states the company.
The ABF Group saw a 3% increase in Q3 revenues to £5.30 billion. It predicts full year 2026 adjusted operating profit will be below that of the prior year. The ABF board has decided to proceed with its proposed demerger of its Retail division, which is expected to become effective before the end of 2027.