Flight schedules expected to return to normal after chaos of last two daysThe FTSE 100 index has edged nearly 10 points lower to 10,660, while Germany’s Dax also dipped 0.1%. Other European indices pushed cautiously higher, with the French Dax up 0.2%, Italy’s FTSE MiB 0.55% higher and Spain’s Ibex climbing 0.4%.Associated British Foods is leading losses on the FTSE 100, down almost 10%, despite announcing that Primark will start offering home delivery in the future.
Total sales are falling at the budget clothing chain and were barely positive in the UK and Ireland.Associated British Foods’ (ABF) fourth-quarter results have left investors hungry for more as its crown jewel, Primark, is expected to deliver a like-for-like sales decline of 3%.
Growth in the UK and Ireland was barely positive, while sales in Continental Europe fell by more than 4% as consumer confidence remains particularly weak.Primark also announced plans to introduce home delivery across Great Britain. While this will likely help boost the top line, running an efficient and profitable delivery and returns service is no easy task, and with Primark’s low price point, doing it profitably is even more difficult.It was a mixed performance from the rest of ABF’s food businesses, with growth across grocery and ingredients largely offset by continued declines in the sugar and agriculture divisions.
Performance in the sugar division continues to be held back by lower yields following a period of unfavourably hot and dry weather, as well as weaker average selling prices in Europe.All in, ABF reiterated its rather vague full-year guidance for group-level underlying operating profits to fall below last year’s level of £1.7bn.
But market forecasts are sitting around 13% lower at £1.5bn, which feels more realistic to us. Today’s update has done little to hint that a sharp improvement in fortunes is around the corner for ABF, and profitability in the Sugar division looks set to worsen still in 2027, offsetting progress in other parts of the business.
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