Full-year results showed profit falling across most of the group's divisions, shifting attention from Primark's expansion to margins, sugar losses and a demerger now just over a year away.

Fourteen per cent. That was the size of the decline in adjusted operating profit reported by Associated British Foods (LSE:ABF) on Tuesday 3 November 2026, taking the figure to £1,508m for the 52 weeks to 12 September. For a FTSE 100 group better known to many shoppers as the owner of Primark, the results marked a clear change in tone, and the shares closed 2.2% lower on the day, placing it among the index's fallers.

The headline number tells only part of the story. Beneath it lie falling margins at Primark, profit declines in Grocery and Ingredients, a sugar Business that has slipped into loss, and a group preparing to split in two. Together, those threads have reshaped how the business is likely to be discussed over the coming year.

Revenue came in at £19.6bn, down 1% at constant currency. Adjusted Earnings Per Share fell 11% to 156.0p, and return on average Capital employed, a measure of how efficiently a company generates profit from the money tied up in its operations, dropped to 12.7% from 15.5%.

Cash generation was steadier. Free Cash Flow was £652m, compared with £648m a year earlier, while Capital Expenditure totalled £1.2bn and acquisitions accounted for £167m. The group ended the year with net cash of £305m before leases and total net Debt of £2.8bn including leases, equal to 1.1 times EBITDA.

Primark: growing sales, thinner margins

Retail profit fell 12% to £1,005m. Primark's sales rose 2% to £9.8bn, but like-for-like sales, which strip out the effect of new stores, fell 2.6%. The regional picture was mixed:

UK and Ireland:like-for-like sales up 0.5%, an improvement on a 3.1% fall the year before.

Continental Europe:like-for-like sales down 4.7%.

United States:sales up 13%.

Primark's adjusted operating Margin narrowed to 10.2% from 11.9%. On a more positive note, its share of the UK clothing market edged up to 6.8% from 6.6%, and it invested £576m in capital expenditure during the year.

Like-for-like figures are widely watched in retail because they show whether existing shops are selling more or less, separating underlying Demand from growth that comes simply from opening new stores. A gap between total sales growth and like-for-like performance, as here, indicates that expansion is doing much of the work.

The combination of rising Market Share and falling margins suggests Primark is holding its ground with shoppers while facing pressure on profitability. For 2027, ABF expects a Primark margin of around 10%, with new space adding about 4% to sales growth.

Food businesses under pressure

The food side of the group also reported lower profits. Grocery sales rose 2% to £4.2bn, but profit fell 11% to £427m and the margin slipped to 10.1% from 11.6%. Ingredients Revenue increased 2% to £2.1bn, while profit fell 8% to £238m. Agriculture held profit steady at £19m. Margin pressure in Grocery is notable because these businesses are often seen as steadier earners than fashion retail, so a decline there removes some of the cushion that Diversification can provide.

The sharpest deterioration came in Sugar. Revenue fell 9% and the division swung to a £47m loss from a £1m loss the year before. ABF cited lower UK selling prices, onerous contract provisions, higher gas costs and lower crop yields. Looking ahead, it expects a sugar operating loss of between £70m and £170m in 2027, depending on gas costs, African output affected by El Niño and currency movements. That is the main reason the group expects adjusted operating profit and adjusted EPS to be lower again in its 2027 financial year.

A business preparing to split

Perhaps the biggest change to the ABF story is structural. The group plans to separate Primark from its food business, with the demerger on track for December 2027. That plan already shapes capital allocation decisions: ABF said no further Buybacks are planned at this stage, so that both future companies remain well financed before separation.

During the year, ABF spent £253m on buybacks and paid £446m in dividends, and it has returned £1.9bn through buybacks across 2023 to 2026. The total ordinary Dividend was held at 63.0p, made up of a 20.7p interim and a proposed 42.3p final.

Primark chief executive Eoin Tonge set out the ambition for the retailer as a standalone business: "We are going to create a stronger, simpler, more scalable business." Primark also plans to introduce UK home delivery by the end of calendar 2027, which would mark a significant change for a retailer long associated with its physical stores.

To help investors understand the separate parts, ABF has scheduled a series of events in 2027, beginning with an AB Foods spotlight in April and continuing with Grocery in May, Ingredients in June and Sugar & Agribusiness in July. Capital Markets Days for AB Foods and Primark are planned for autumn 2027.

In the market, ABF's shares were about 3% lower at midday before closing 2.2% down. The wider FTSE 100 fell 1.14% to 10,638.43, its steepest one-day fall in a month, with miners and banks adding to the pressure. Coca-Cola Europacific Partners (LSE:CCEP), another consumer name, fell 2.1% after flagging cost pressures.

Key dates to watch

Thursday 5 November:Next third-quarter trading update, offering another read on UK clothing retail.

Thursday 12 November:ONS first quarterly GDP estimate for July to September 2026 (7:00am).

April–July 2027:ABF investor events (AB Foods spotlight in April; Grocery in May; Ingredients in June; Sugar & Agribusiness in July).

December 2027:Planned Primark demerger from ABF's food business.

The bottom line

ABF's 14% profit decline has shifted the focus from Primark's growth to the pressures building across the group. Margins narrowed at Primark and Grocery, Ingredients profit slipped, and Sugar moved into a loss that is expected to widen in 2027. With buybacks paused and the demerger scheduled for December 2027, the coming year's investor events are likely to be closely followed for detail on how each business will stand on its own.