Why Are ABF Shares Falling

26 March 2024: ABF (Associated British Foods) shares recently dropped due to a profit warning issued by the company itself. Here's a breakdown:

1. Profit Warning: ABF expects a strong performance for the current financial year, but predicts a lower profit in the next one.
2. Reason for Lower Profit: Primark, a major subsidiary of ABF, anticipates margin squeeze due to rising costs. While Primark's sales might grow, they won't be able to fully offset the cost increases.
3. Investor Reaction: The profit warning caused investors to lose confidence, leading to a significant drop in ABF's share price.

While the current year might be positive, the future outlook dampened investor sentiment.