Why Is Associated British Foods Plc Up Today?

Associated British Foods Plc (LSE:ABF) shares rose 1.53% to 2,052.0p today. The move follows the group's annual results for the 52 weeks to 12 September 2026, which set out the plan to demerge Primark and gave an outlook for the 2027 financial year.

Group Revenue was £19,582 million, up 1% reported, while adjusted operating profit fell 13% to £1,508 million and adjusted Earnings Per Share declined to 156.0p from 174.9p. The total Dividend was held at 63.0p per share.

The gain therefore comes alongside a year of lower profit, but also a clearer strategic path, with the demerger timetable now confirmed and the board maintaining Shareholder returns.

About Associated British Foods Plc

Associated British Foods Plc is a diversified international food, ingredients and retail group. Its best-known Business is Primark, the value fashion retailer, alongside Grocery, Ingredients, Sugar and Agriculture divisions.

George Weston is Chief Executive, Michael McLintock is Chairman and Joana Edwards is Chief Financial Officer. Eoin Tonge leads Primark as Chief Executive.

With operations across Europe, the Americas, Africa and Asia, LSE:ABF is influenced by consumer spending, Commodity prices, currencies and weather conditions as well as by retail trends.

Key Reasons Behind Today's Uptick

Today's 1.53% gain reflects the wider market context and the information in the latest results.

For investors in LSE:ABF, the separation of a global value-fashion retailer from a food and ingredients group is the biggest structural change in years.

Investors have been waiting for details of how Primark and the Food businesses will be separated. The announcement that the demerger is planned for December 2027 gives shareholders a clearer timeline.

The decision to keep the total dividend at 63.0p and the completion of a £250 million share buyback programme in August also contributed to the picture of continued Capital discipline.

Annual Results: Lower Profit, Stable Cash Generation

The results show a group coping with weaker Demand in parts of its portfolio while continuing to invest. Revenue edged up 1% on a reported basis but fell 1% in constant currency.

Adjusted operating profit of £1,508 million compares with £1,734 million in 2025. Operating profit was £1,327 million and profit before tax was £1,276 million.

Basic earnings per share were 131.9p, against 141.6p, and return on average capital employed was 12.7%, down from 15.5%.

Free Cash Flow was £652 million, in line with £648 million a year earlier. Gross Investment rose to £1,433 million from £1,244 million, with Capital Expenditure of £1,246 million.

Net Debt including leases was £2,845 million, and the Leverage Ratio was 1.1 times. The group reported net cash before Lease liabilities of £305 million and total Liquidity of £2,397 million.

Primark: Store Growth Against Softer Like-for-Like Sales

Primark revenue was £9,820 million, up 2% in constant currency, while adjusted operating profit was £1,005 million. The adjusted Operating Margin was 10.2%, compared with 11.9% the previous year.

Like-for-like sales fell 2.6% across the group. The UK rose 0.5%, continental Europe declined 4.7% and US sales increased 13%.

Primark ended the year with 508 stores across 19 markets, including four Franchise stores. It opened 33 owned stores, 14 of them in the US, and spent £576 million on capital projects.

US expansion is an important part of the Primark story, with sales there rising 13% and the number of stores in the market growing during the year. Return on average capital employed at Primark was 16.8%, compared with 19.1% in 2025.

New Leadership is also taking shape, with Filip Ekvall joining as Chief Commercial Officer and Lucy Slinger as Chief Financial Officer in September 2026.

Food Businesses Face Mixed Conditions

Grocery revenue was £4,237 million and adjusted operating profit was £427 million, down 11%, with a margin of 10.1%.

Ingredients revenue was £2,105 million and profit was £238 million, down 8%, with a margin of 11.3%.

Sugar reported an adjusted operating loss of £47 million on revenue of £1,966 million, reflecting lower European sugar prices. Agriculture delivered adjusted operating profit of £19 million, flat on the year, on revenue of £1,015 million.

The Primark Demerger

The board plans to demerge Primark from the rest of the group in December 2027, leaving shareholders with stakes in two separately listed companies.

Expected one-off separation costs are around £75 million, while dis-synergies are expected to be below £45 million in aggregate. Investor events for ABF are expected between April and July 2027.

The structure aims to give each business its own capital allocation, management focus and investor base. Primark can concentrate on store growth and customer offer, while the Food businesses concentrate on their own markets.

The going-concern assessment runs to 4 March 2028 and covers both demerger and no-demerger scenarios.

Dividend and Capital Returns

The final dividend is 42.3p per share, with a cost of £296 million. It will be paid on 8 January 2027 to shareholders on the register on 11 December 2026.

Combined with the 20.7p interim dividend, the total of 63.0p is unchanged from 2025. The group completed a £250 million buyback programme in August, with £253 million of repurchases in the financial year.

Outlook for the 2027 Financial Year

The group expects adjusted operating profit and adjusted earnings per share in 2027 to be below 2026, mainly because of Sugar.

Primark is expected to deliver an adjusted operating margin of about 10%, with new space adding around 4% to sales growth. The 2027 financial year has 53 weeks.

Grocery and Ingredients profit is expected to be broadly in line with 2026, although Grocery will include a one-off impact from consolidating Hovis losses. Agriculture is expected to be ahead of 2026.

Sugar is expected to report an adjusted operating loss of £70 million to £170 million, with the higher end assuming adverse gas costs, African production and currency effects. Capital expenditure is expected to be similar to 2026.

Sector and Economic Exposure

Consumer-facing shares react to household spending, Inflation and confidence. Primark's exposure to continental Europe, where like-for-like sales fell, shows how sensitive value retail can be to local trading conditions.

Primark's recent trading highlights this contrast between markets. The UK performed better than continental Europe, while the US continued to expand as new stores opened.

The Food divisions are exposed to agricultural prices, energy costs, currency movements and demand in the US and Europe, all of which can move quickly from one period to the next.

Risks and Considerations

Sugar remains the most visible risk to earnings, with a loss forecast for 2027. Weaker European sales at Primark, margin pressure and competition among value retailers are additional factors.

Execution of the demerger, including costs and timing, is another consideration. The outlook for 2027 also points to lower group profit before the separation takes place.

Consumer confidence in the UK and Europe will also matter, as Primark relies on footfall and value-conscious shoppers, and any further softening in demand could affect sales and margins.

Investors may also monitor leverage, which rose to 1.1 times, as the group continues to invest in stores and capacity.

Conclusion

Associated British Foods Plc shares rose 1.53% to 2,052.0p today, after annual results that showed revenue of £19,582 million, a 13% fall in adjusted operating profit and an unchanged total dividend of 63.0p.

For LSE:ABF, the main themes are the planned Primark demerger, store growth in the US, the Sugar recovery and the group's capital returns, set against consumer, commodity and execution risks.

Investors will follow the 2027 trading updates and the investor events planned for next year.