Associated British Foods (ABF) Trading update summary

Primark performance and strategic initiatives

• Fourth quarter sales expected up 2%, with full-year growth also at 2% for 2026, despite challenging consumer environments and like-for-like sales down 2.6% for the year; new stores and franchise expansion contributed about 5% to growth.

• UK sales expected to grow 1% in Q4, with market share gains; US sales expected to grow 11% in Q4, supported by new store openings and localized product offerings.

• Focused investments in pricing, product offer, marketing, and digital capabilities, including the successful launch of the Iconic Value campaign and Click & Collect growth.

• Adjusted operating margin for 2026 and 2027 expected at approximately 10%, with new space growth in Europe, US, and franchise markets contributing around 4% to sales growth in 2027.

• Plans to launch profitable U.K. home delivery, supported by acquisition of an automated depot in Sheffield, aiming for incremental growth and complementing the store model.

Food businesses and segment outlook

• Grocery sales grew, but Twinings underperformed due to hot weather impacting tea consumption; Ovaltine faced short-term distribution changes in Thailand.

• Grocery adjusted operating profit for 2026 expected slightly below previous guidance, with Hovis acquisition integration underway and anticipated future synergies.

• Ingredients segment delivered good growth, with Q4 sales expected to increase about 10%; 2026 outlook unchanged, and 2027 profit expected broadly in line due to start-up costs in India.

• Agriculture segment to exit U.K. compound feed business, with profits expected to grow next year; Q4 sales to decrease mid-single digits.

Sugar segment challenges and outlook

• Sugar adjusted operating profit loss for 2026 expected at the higher end of GBP -25m to -60m, with 2027 losses forecasted between GBP -70m and -170m due to small U.K. crop, high gas costs, and other variables.

• European sugar production deficit and rising world prices may improve future prospects, but 2027 results will not benefit due to contracting cycles.

• Cost base under review, including closure of Cantley site and energy reduction initiatives.