Associated British Foods has cut profit guidance for its sugar division amid escalating energy costs from Middle East shipping disruptions. The FTSE 100 group now expects the unit to post a £60mn operating loss in 2026, up sharply from the previously forecast £25mn loss, after gas prices jumped from 75p to 105p per therm following the Strait of Hormuz closure.

Chief executive George Weston cited the conflict's duration and severity as primary drivers of higher input costs, while European sugar prices remain depressed. Sugar sales dropped 4% to £451mn in the third quarter, with production delays at a new Tanzania facility compounding demand weakness from health-conscious European consumers.

Primark, the discount fashion chain, saw like-for-like sales decline 2.2% in the quarter, with European revenues falling 3.6%. The retailer continues toward its planned separation from ABF's food business by end-2027, aiming to eliminate the conglomerate discount that has weighed on the group's valuation. Barclays analysts described the sugar downgrades as difficult to absorb.

Group sales held steady at £5.3bn, but ABF confirmed full-year operating profit and earnings per share will decline. Shares slipped roughly 2% on Wednesday as investors digest the dual pressures on both core business segments ahead of the demerger.