Associated British Foods (ABF) Q4 2025 TU earnings summary

Executive summary

• Second half performance was resilient amid consumer caution, inflation, and geopolitical uncertainty, with strong UK and Ireland retail gains, improved US sales, and softer results in continental Europe.

• Primark sales expected up 1% in H2, with UK market share rising from 6.6% to 6.8%.

• Strategic actions included closing the Vivergo bioethanol plant, restructuring the Spanish sugar business, and agreeing to acquire Hovis to strengthen the UK bakeries segment.

• Food businesses performed in line with expectations; sugar profitability improvement delayed, with margin restoration in Europe taking longer.

• Continental Europe saw softer trading in H2, especially in France, Italy, and Germany, attributed to weak consumer sentiment.

Financial highlights

• Primark's adjusted operating profit margin for the full year is broadly in line with last year; H2 margin lower than H1 due to one-off items.

• Primark H2 sales growth expected at 1%, with like-for-like sales down 2% year-over-year; full-year sales growth projected at 1%, driven by new store openings.

• Sugar segment in Europe remains loss-making due to oversupply and low prices, with an adjusted operating loss near £40m and sales down 10%.

• Africa sugar operations (notably Tanzania, Zambia, Malawi, Eswatini) are performing well, with a new plant in Tanzania nearing commissioning.

• Agriculture business impacted by one-offs and the closure of Bevogo, with adjusted operating profit significantly below last year.

Outlook and guidance

• Confident in future performance, especially in UK and Ireland, with strong autumn-winter ranges.

• No expected increase in Primark margin next year; tailwinds to be reinvested in demand creation rather than margin expansion.

• Primark space growth expected around 4% next year, maintaining disciplined expansion.

• Sugar profitability in Europe to remain subdued; margin restoration will take time, with improvement anticipated in 2026, but Africa expected to contribute positively.

• Hovis synergies expected to be realized mostly within a year after CMA approval, with upside to the £50 million synergy estimate.