Associated British Foods (ABF) Trading Update summary

Financial performance and outlook

• Achieved strong top-line growth, significant profitability improvement, and excellent cash generation, with cash generation outpacing profit growth for the year ending September 14.

• Primark sales expected to rise about 4% in H2, with strong profitability and margin delivery; European sales outside the UK and Ireland performed well, and US rollout is progressing.

• Grocery and Ingredients divisions showed good growth, with international brands, strategic acquisitions, and increased marketing investment supporting performance.

• Completed a £500 million share buyback ahead of schedule, with an additional £100 million buyback planned by November 2024.

• Agriculture sales declined slightly in H2, but FY24 profitability is expected to be broadly in line with last year, with improvement anticipated in FY25.

Sugar business challenges and recovery

• Sugar profitability for next year is forecast to drop sharply to £50–75 million from over £200 million this year due to much lower European prices and market oversupply.

• Lower beet prices have been negotiated for 2026, providing confidence in a strong profitability rebound that year.

• Oversupply is driven by increased acreage, high field yields, and significant Ukrainian imports, leading to a steep price decline of nearly €300 per ton.

• African sugar operations (Illovo) remain a source of optimism, with growth expected from market expansion, operational improvements, and new projects.

• Significant impact expected in FY25 with recovery anticipated in FY26.

Primark strategy and investments

• Like-for-like sales in the UK and Ireland were impacted by poor weather, but stock levels are healthy heading into autumn/winter.

• Strategic investments are focused on product range, collaborations, licensing, digital engagement, marketing, store refits, and brand building in Germany and the US.

• Store contribution margins are expected to expand, with some of the gains reinvested into growth initiatives.

• Expansion continues with a new franchise agreement for the Gulf region (GCC) and ongoing US rollout; the 530-store target by FY2026 remains on track.

• Eight new Primark stores opened in Europe and three in the US during H2.