Half Year 2026 Associated British Foods PLC Earnings Call Transcript
Key Points
- Associated British Foods PLC (ASBFF) is proceeding with the demerger of Primark, which is expected to provide more focused governance and oversight for both the food and retail businesses.
- Primark has shown strong brand strength and market share gains in the UK, with successful initiatives to reenergize its customer proposition.
- The company has a solid balance sheet and continues to invest in growth opportunities, including GBP534 million of capital expenditure in the first half.
- The food business is positioned for strong improvement in profit in the second half, with investments in marketing, innovation, technology, and capacity.
- Primark's expansion into new markets, including the US and the Middle East through a new franchise model, is progressing well and contributing to sales growth.
- Group adjusted operating profit decreased by 18% at constant currency, with significant margin compression in the first half.
- The sugar segment experienced an adjusted operating loss due to prolonged low average selling prices in Europe and reduced export sales.
- Primark's like-for-like sales declined overall by 2.7%, with weak trading in Europe and challenges in consumer spending.
- The grocery segment faced lower profit due to weakness in US oils and higher cocoa costs impacting international brands.
- The Middle East conflict poses potential risks to consumer spending and cost impacts, which could affect future performance.
Good morning, everybody. Just before we get on to the results, a couple of minutes on the demerger of Primark. We've -- since last November, as a Board and as a group, we have reviewed sort of all angles every which way on this potential transaction. And I think it's fair to say that as a Board, we are -- we have a deeper conviction even than before that the restructuring and the split is the right way to go. Just to emphasize, this is not an exercise in financial engineering.
We feel that each of these businesses, because they're very distinct dynamics, deserve and need separate oversight from separate dedicated boards and accountability to separate groups of shareholders. Each of them have chosen to invest in either food or retail because of a clear choice. So we are absolutely focused now on delivering this transaction. The timing we've talked about at the end of 2027, that's to give us maximum flexibility. I suppose there's probably a sweet spot between June and October.
The costs, I hope very much
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