Associated British Foods has delivered a mixed trading performance in the second half of its financial year, with strong growth in the US offsetting weaker European markets.
Primark numbers used to be highly anticipated and could seriously move the dial for AB Foods shares. However, in recent years, growth has started to splutter, and it’s very difficult to get excited about ABF’s updates.
The first half of 2025 proved to be more of the same slow, uninspiring growth. Investors have started to throw in the towel.
AB Foods shares were down 11% in early trade on Wednesday as investors digested Primark’s numbers, as well as grocery, sugar and agriculture performance that underwhelmed.
Primark shows resilience
The retail giant’s sales are expected to grow around 1% in H2, despite challenging market conditions. UK and Ireland performance improved sequentially from H1, with sales up 1% and market share rising from 6.6% to 6.8%. The retailer benefited from strong womenswear offerings and increased digital engagement, including Click and Collect, now available across all 187 British stores.
European performance proved more subdued. Spain and Portugal are expected to grow around 2%, while France and Italy faced headwinds with sales declining approximately 4%. Central and Eastern Europe provided a bright spot with 9% growth driven by new store openings.
The US delivered standout performance with 23% sales growth expected in H2. Four new stores opened, including the company’s first Tennessee location, as the value proposition resonated strongly with American consumers.
The company relies on new stores for growth and continues to expand its store portfolio with 15 new openings in H2, including preparations for Middle East franchise operations, which are set to start in Kuwait this October.
Food businesses face headwinds
Grocery sales are expected to match prior year levels, with international brands like Twinings and Ovaltine performing well. However, Allied Bakeries recorded an operating loss in challenging UK market conditions. ABF announced an agreement to acquire Hovis Group, subject to regulatory approval, targeting significant cost synergies.
Ingredients delivered solid results with sales broadly matching last year. AB Mauri showed good underlying growth, while speciality ingredients businesses performed well, particularly in enzymes and health nutrition.
Sugar struggles continue
Sugar faces ongoing challenges with an adjusted operating loss of around £40m expected for the full year. The UK government’s decision not to support Vivergo bioethanol led to plant closure, while low European sugar prices and high beet costs pressured UK and Spanish operations. African operations showed mixed performance, with Malawi and Eswatini growing while other markets recovered from drought impacts.
Agriculture sales are expected to rise 1% in H2, though operating profit will be significantly below last year due to exceptional weather affecting joint venture Frontier and one-off costs.
“I’m pleased with how the Group has performed in the second half of our financial year in what continues to be a challenging environment, characterised by consumer caution, geopolitical uncertainty and inflation,” said George Weston, Chief Executive of Associated British Foods.
“Primark delivered improved trading in the UK and strong sales growth in the US, while trading on the continent was softer in a weaker consumer environment. In our food businesses, overall trading in the second half was in line with our expectations.
“This has also been a busy period strategically, including the decision to close the Vivergo bioethanol plant, the restructuring of our Spanish sugar business, and an agreement for Allied Bakeries to acquire Hovis to create a financially sustainable UK bakeries business. Against a backdrop of continued volatility in 2026, we will start to see the benefit from our recent actions and continued investment.”