Associated British Foods is nothing if not eclectic. It sells budget fashion and premium tea, sugar and sausages, yeast and baklava. This year, the group delivered a familiar blend of performance: some strong, some weak, all slightly confounding. Revenues for the year to 13 September 2025 came in flat at £19.5 billion. Adjusted operating profit, however, fell 13% to £1.73 billion, clipped not by consumers' unwillingness to spend, but by a nosedive in sugar profits and soggy margins in grocery and agriculture.
Primark, its star attraction, again did the heavy lifting. Revenues rose 1% to £9.5 billion, thanks to continued expansion in Europe and the US. Yet like-for-like sales slipped 2.3%, with UK performance especially soft in the first half. A stronger womenswear offer and stepped-up digital engagement helped steady things later in the year. Primark now spans 473 stores across 17 markets and has opened its first outlet in Kuwait via franchise. Adjusted operating profit edged up 2% to £1.13 billion, flattered in part by a non-recurring £20 million benefit.
That might be enough to please shareholders, were it not for the bigger question looming over the group: should Primark and the rest of ABF go their separate ways?
The group confirmed that it is deep into a strategic review of its corporate structure. A decision could come by April 2026, in time for the interim results. Chief executive George Weston told Reuters that while no outcome is guaranteed, "there's a fair likelihood" of separation. A demerger would allow investors to value Primark on retail metrics and the food businesses-often overlooked-on their own merits. Then again, the whole may still be greater than the sum of its parts.
Sweet troubles
Analysts at Jefferies are sceptical that any break-up will lead to a re-rating. In their view, neither Primark nor the food arm would command a premium valuation on its own. They also expect a softer outlook for 2025/26, with guidance implying modest earnings downgrades. Sugar is expected to return to only marginal profitability, and Primark's margin is set to shrink slightly as it reinvests in its customer offer.
This year's sugar results were indeed grim. A £205 million operating loss replaced last year's £213 million profit. European sugar prices stayed low while beet costs stayed high. In Spain, two of three beet plants were shuttered. In Africa, results were mixed. Exceptional charges added another £188 million to the damage.
Grocery, too, was underwhelming. Sales were flat at £4.1 billion, with adjusted profit down 6% to £478 million. Allied Bakeries remained a drag; international brands like Twinings held up better. Agriculture stumbled, while Ingredients stood out-posting a 16% rise in profit amid resilient demand for yeast and enzymes.
ABF returned £656 million in dividends and spent £603 million on buybacks, with another £250 million planned for 2026. It can afford that, for now. But investors may care less about how much cash ABF is giving back-and more about what kind of company it plans to become.
