After returning £1.9bn to shareholders through Buybacks since 2023, Associated British Foods (LSE:ABF) has said it does not plan any more for now, choosing to keep its Balance Sheet ready for the separation of Primark.

Share buybacks have been a steady feature of the Associated British Foods (LSE:ABF) story in recent years. Between 2023 and 2026, the FTSE 100 group returned £1.9bn to shareholders by repurchasing its own shares. In its full-year results on Tuesday 3 November 2026, however, the company signalled a change of pace: no further buybacks are planned at this stage.

The reason given was straightforward. ABF wants both of the businesses that will emerge from the planned Primark demerger, due in December 2027, to be well financed when they go their separate ways. The announcement came alongside a forecast of lower profit for the year ahead, and ABF shares finished the session 2.2% lower, among the index's fallers on a day when the FTSE 100 dropped 1.14% to 10,638.43.

How buybacks fit into Shareholder returns

A buyback is one of two main ways a company hands Cash Back to its owners, the other being dividends. When a company buys and cancels its own shares, the remaining shareholders each own a slightly larger slice of the business, and Earnings Per Share can rise because profits are divided among fewer shares.

Buybacks are generally seen as more flexible than dividends. A Dividend that is cut can send a negative signal, so many boards treat their regular payout as something close to a commitment. Buyback programmes, by contrast, can be expanded, slowed or paused with less disruption, which makes them a natural lever to pull when priorities change.

ABF's numbers for the 52 weeks to 12 September 2026 illustrate how both tools were used:

Buybacks in the year:£253m.

Dividends paid in the year:£446m.

Buybacks across 2023–2026:£1.9bn in total.

Total ordinary dividend:held at 63.0p per share, made up of a 20.7p interim and a proposed 42.3p final.

The decision, then, is to keep the dividend level unchanged while stepping back from repurchases, which is consistent with the general pattern of dividends being treated as the stickier commitment.

Reading the balance sheet

Why might a company with buyback capacity choose to pause? The answer lies partly in what a demerger involves.

When one company splits into two, its assets, liabilities and cash have to be divided. Each new entity needs enough financial resilience to operate independently, to fund its Investment plans and to meet its obligations without leaning on the other. Retaining cash in the run-up to a separation gives management more room to arrange that division sensibly.

ABF's current financial position offers some context:

Net cash before leases:£305m.

Total net Debt including leases:£2.8bn.

Leverage:1.1 times EBITDA.

Free cash flow:£652m, compared with £648m in the prior year.

Capital expenditure:£1.2bn, including £576m at Primark.

Acquisitions:£167m.

The distinction between net cash and net debt here is a matter of how leases are treated. Retailers in particular carry substantial Lease commitments for their stores, and accounting rules require those to be shown as liabilities. Excluding leases, ABF holds more cash than borrowings; including them, it carries net debt. Both views are legitimate, and companies often present each to give a fuller picture.

Free cash flow, broadly the cash left after running the Business and paying for capital investment, was almost unchanged year on year. Against that, the group spent £253m on buybacks and £446m on dividends, so returns to shareholders together exceeded free Cash Flow during the year. For illustration, adding the two figures gives £699m (£253m plus £446m), compared with £652m of free cash flow, a gap of £47m. That arithmetic alone does not determine policy, but it helps show why a company might reassess the pace of buybacks when profits are under pressure.

The pause also lands against softer trading. Adjusted operating profit fell 14% to £1,508m, adjusted earnings per share dropped 11% to 156.0p and return on average capital employed slipped to 12.7% from 15.5%. ABF expects group adjusted operating profit and earnings per share to be lower again in 2027, mainly because of its Sugar division, which it forecasts will make an operating loss of between £70m and £170m.

Primark, meanwhile, is guided to a Margin of around 10% next year after it fell to 10.2% from 11.9%, and the retailer is investing in new space and in a UK home delivery service planned by the end of calendar 2027.

Chairman George Weston described the year as one of "good strategic and operational progress across the group." The capital allocation decision suggests that, in management's view, the priority for now is preparing the ground for two independent companies rather than shrinking the share count further.

What the pause does and does not signal

It is worth being careful about interpretation. ABF has said no further buybacks are planned at this stage, a form of words that leaves the door open rather than ruling them out permanently. The company has not given any figure for future returns, and nothing in its statement indicates how either successor business will approach buybacks after the separation.

What the decision does indicate is a shift in emphasis. Over the past few years, surplus cash was regularly channelled back to shareholders through repurchases. For the period leading up to the demerger, the balance sheet appears to be the higher priority. ABF has also scheduled investor events through 2027 and Capital Markets Days for both AB Foods and Primark in the autumn of that year, where the financial frameworks of the two businesses may be set out in more detail.

Key dates to watch

Thu 5 Nov:Bank of England MPC decision, with a 25bp rise to 4% widely expected; borrowing costs are relevant to any company's balance sheet planning.

Tue 1 Dec:FTSE Russell December review market-cap data cut-off.

Wed 2 Dec:December review announcement, after the UK close.

April–July 2027:ABF investor events (AB Foods spotlight, Grocery, Ingredients, Sugar & Agribusiness).

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

The bottom line

ABF's decision to pause buybacks after £1.9bn of repurchases since 2023 is a clear statement of priorities ahead of the Primark separation. Keeping cash within the group gives management more flexibility to set up two independently financed companies, while holding the dividend at 63.0p maintains the more visible part of its shareholder returns.

With profits expected to fall again in 2027 and Capital Expenditure running at £1.2bn, the pause fits a wider picture of a company conserving resources through a period of change. Whether buybacks return, and in what form, is likely to become clearer only as the shape of the two successor businesses is defined.