Associated British Foods plc

Group revenue was GBP 9.5 billion, flat versus last year at actual rates and 2% below last year at constant currency. Group adjusted operating profit was GBP 691 million, down 18% at constant currency, and adjusted EPS was down 15%. Primark sales increased 2% to GBP 4.7 billion; Primark like-for-like sales fell 2.7%, with U.K. like-for-like sales up 1.3% and Continental Europe like-for-like sales down 5.6%. Primark adjusted operating profit margin was 10.1%. Grocery sales were GBP 2.1 billion, flat year on year; Sugar sales declined 9% and Sugar posted an adjusted operating loss of GBP 27 million; Agriculture adjusted operating profit was GBP 6 million versus GBP 12 million last year. Free cash flow was GBP 71 million versus GBP 27 million last year. Capex was GBP 534 million in H1, and half-year net debt including lease liabilities was GBP 3 billion; leverage was 1.2x. The interim dividend was 20.7p, in line with last year. Full-year 2026 guidance was broadly unchanged for the group, with adjusted operating profit and adjusted EPS expected to be below last year; Primark full-year adjusted operating margin is expected to be approximately 10%; Grocery adjusted operating profit is expected to be moderately below last year; Ingredients guidance is unchanged; Agriculture adjusted operating profit is expected to be below 2025; Sugar is now expected to deliver a full-year adjusted operating loss.

Michael George McLintock and George Weston framed the Primark demerger as a strategic governance decision rather than financial engineering, arguing the retail and food businesses have very different dynamics and deserve separate boards and shareholder bases. Weston said the split should support long-term value creation over 5, 10 and 20 years, while also emphasizing that both businesses remain fundamentally strong. His tone was confident and deliberate, but he acknowledged the first half was challenging and that the Middle East conflict and sugar markets create uncertainty.

Joana Edwards said the first half was broadly in line with expectations outside Sugar, with group revenue flat at GBP 9.5 billion, adjusted operating profit down 18% to GBP 691 million, and adjusted EPS down 15%. She highlighted Primark’s 10.1% operating margin, the impact of markdowns and higher investment in product, brand, digital and technology, and said the full-year Primark margin target remains approximately 10%. On cash, she noted free cash flow of GBP 71 million, capex of GBP 534 million in the half, leverage of 1.2x, total liquidity of GBP 2.2 billion, committed facilities of GBP 1.8 billion, and a pension surplus of GBP 1.7 billion. She also said 2026 capex is still expected to be around GBP 1.2 billion, the interim dividend is 20.7p, and GBP 250 million of buybacks should be completed this year, with GBP 187 million already done.

In the Q&A, Bernstein asked whether Primark’s independence changes capital allocation, whether H1 margin compression meant the company bought inventory too aggressively, and whether management would review more of the food portfolio. The transcript cuts off before a full answer is given, but management had already said the Primark demerger is meant to improve dedicated oversight and accountability rather than change the core economics. They also repeatedly defended Primark’s H1 margin as reflecting markdown management, cost inflation, and deliberate investment in growth capabilities rather than a structural problem.