Earnings call transcript: ABF’s Q4 2025 sees stock fall amid challenging market

Associated British Foods (ABF) reported its fourth-quarter earnings on September 10, 2025. Despite describing its group performance as "pleased" in a challenging environment, the company’s stock dropped 10.44% following the announcement. The decline reflects investor concerns over delayed profitability in its sugar business and a cautious consumer environment in Europe. According to InvestingPro analysis, ABF maintains a "GREAT" financial health score of 3.2 out of 4, suggesting strong fundamental stability despite market reactions. The company currently appears undervalued based on InvestingPro’s Fair Value analysis.

Key Takeaways

• Primark sales are expected to rise by 1% in the second half, but no significant margin expansion is anticipated.
• The sugar business’s profitability is delayed, with expectations of recovery next year.
• ABF’s stock fell 10.44% after the earnings call, reflecting market concerns.
• The company is targeting synergies from the Hovis acquisition, pending regulatory approval.

Company Performance

Associated British Foods reported mixed results for Q4 2025. The company maintained a steady performance in its grocery division, particularly with its Twinings brand. However, profitability in the sugar business is expected to be delayed until next year. Primark, one of ABF’s key divisions, is projected to see a modest sales increase, although margin expansion remains limited. The company faces challenging consumer sentiment across Europe, compounded by inflation in the UK and US.

Financial Highlights

• Primark sales: Expected to rise by 1% in the second half.
• Sugar business: Profitability delayed until next year.
• Grocery division: Strong performance, led by Twinings.

Market Reaction

ABF’s stock price fell by 10.44% following the earnings call, closing at 2,241, down from the last close value. This decline is notable given the company’s 52-week range, with a high of 2,430 and a low of 1,819. The stock movement indicates investor apprehension about the delayed profitability in the sugar business and the challenging consumer environment in Europe. InvestingPro data reveals the company holds more cash than debt on its balance sheet, providing financial flexibility during this challenging period. For detailed valuation metrics and comprehensive analysis, check out the Pro Research Report available on InvestingPro.

Outlook & Guidance

Looking ahead, ABF expects 4% space growth for Primark next year. The company is also focusing on synergies from the Hovis acquisition, potentially exceeding £50 million. Despite the challenging market conditions, ABF remains optimistic about modest improvements in various divisions and the recovery of its sugar business in subsequent years.

Executive Commentary

CEO George Weston commented, "We’ve tackled what I could sloppily call the problem children," referring to the company’s efforts to address underperforming areas. He also expressed hope for improved consumer confidence in Europe, stating, "We hope the consumer, in European consumer in particular, will feel more confident at some point in the future." Weston conveyed enthusiasm for the coming year, saying, "There’s lots going on. We’re looking to next year with enthusiasm."

Risks and Challenges

• Consumer Sentiment: Weak consumer sentiment in key European markets could impact sales.
• Inflation: Persistent inflation in the UK and US may pressure margins.
• Sugar Market: Oversupply in the European sugar market poses a challenge.
• Regulatory Approval: The pending CMA approval for the Hovis acquisition could affect strategic plans.
• Competitive Pressure: Potential competition from Inditex’s Lefties could impact Primark’s market share.

ABF’s Q4 2025 earnings call highlighted both opportunities and challenges. While the company is making strategic moves to enhance its operations, market conditions remain tough, and investor sentiment reflects these uncertainties. With liquid assets exceeding short-term obligations and a strong current ratio of 1.61, ABF maintains robust financial flexibility. For deeper insights into ABF’s financial health and growth potential, including 8 additional exclusive ProTips, explore the comprehensive analysis available on InvestingPro.

Full transcript - Associated British Foods PLC (ABF) Q4 2025:

Conference Operator: Good morning and thank you for standing by. Welcome to the Associated British Foods Trading Update conference call hosted by George Weston, CEO, and Joana Edwards, Interim Finance Director. At this time, all participants are in a listen-only mode. After the speaker’s introductory remarks, there will be a question and answer session. To ask a question during the session, you will need to slowly press 11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to George Weston. Please go ahead.

George Weston, CEO, Associated British Foods: Morning, everyone, and thanks for joining this call. We’ve got quite a lot to go through because we’ve had a very busy second half, as a reminder, of the trading update for that second half of the 2025 financial year. I am pleased with how the group has performed in the second half. The environment is very challenging given ongoing consumer caution, geopolitical uncertainty, tariffs in particular, and actually persistent inflation in both the U.S. and in the UK markets, particularly around food. Let me start with Primark, where our overall sales are expected to be up 1% in the second half. Very pleased with the strong improvement in trading in the UK and Ireland. Total sales are expected to be up in the second half after a difficult first half, particularly in the months that followed the budget. The product offer was strong. Women’s wear is absolutely flying.

The execution is good both in-store but also in our digital engagement. We’re trialing our app, which is coming soon to all markets. Click and Collect is fully rolled out in GB, and we’re continuing to optimize the store estate in the UK, a couple of new stores and then refurbishments. All this contributes to market share gain in the UK market. From 6.6% in the first half to 6.8% in the second half gives us great confidence. In continental Europe, the consumer environment is very difficult. Spain is, I think, more driven by income. In France, it’s driven, not surprisingly, by sentiment. The second half trading after a strong first half or a very good first half in continental Europe has been soft in the second half.

News, as a reminder, our first store franchise operation in the Gulf States opens before Christmas, and we think that those markets, the Gulf State markets, will be very good ones for us. Primark’s profit delivery in the second half remains strong, and adjusted operating profit margin for the full year broadly in line with last year. That’s Primark. Difficult consumer environment but actually trading well and lots of, I think, the ranges going into autumn, winter, very strong. Women’s wear, good. Moving to the food businesses, where the trading in the second half has been fully in line with our expectations, and we have given an update today. We’re guiding sugar profitability. There’s profit improvement in sugar to be delayed. We’ll get some back next year. We’ll be profitable, clearly profitable next year, but the restoration of margins in the European market will take a bit longer.

Europe remains oversupplied. Africa, on the other hand, is doing really well. We are very close now to the commissioning of the new plant in Tanzania. Important step for us, that one. We’ve done what we said we were going to do in tackling some of the difficult areas. Bevogo, very sadly, has gone. It didn’t need to end up where it did, but being closed. Sadly, the Bevogo part of our history is now been and gone. The restructuring of our Spanish sugar business has again occurred. There’s more to do, but we’ve taken a great hack out of our cost base in Spain. As I say, there’s more to be done. That Spanish business then will depend on the restoration of more sensible European sugar business, but the cost base is much reduced and will be further.

In the UK, where after dancing around each other for seemingly years, we’ve reached an agreement to acquire Hovis, subject to CMA approval, of course. It gives us an opportunity to extract very significant synergies and to create a sustainably profitable bread business, which is then a platform for innovation. It’s important that we all look at this merger not so much as a synergy play, not just as a synergy play, although that’s important and big. It’s also a new platform for improved consumer offers. As I mentioned, it’s subject to CMA approval, and we’ve begun to work through that process. Always much more to be done, but we’ve done a lot. The restoration of a much better level of sales performance in the biggest market, the UK, has been a standout.

Trading in the UK, actually across continental Europe, in the last few weeks as we got into the spring, sorry, into the autumn-winter ranges has been very good. We’re confident in the performance looking forward. With that, let me hand over to questions.

Conference Operator: As a reminder, to ask a question, you will need to slowly press 11 on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. We will now take the first question from the line of William Woods from Bernstein. Please go ahead.

William Woods, Analyst, Bernstein: Hi. Good morning. The first question’s on Primark. Obviously, you’ve seen slightly softer performance in France and Italy over the last few months due to the macro. Do you think you’re losing market share here? I suppose when you look at the opportunities for expansion, France and Italy are key markets for that. Are you still comfortable on the relative market position in those markets? The second one is, obviously, UK bread has been a challenge for a long time, and you’ve talked about fixing the problem children. Why did you decide to make that problem potentially bigger by acquiring Hovis? Do you still see this as rational capital allocation? Thank you.

George Weston, CEO, Associated British Foods: Okay. France and Italy fundamentally are good markets for us. It’s quite hard to track market share in both countries because our presence is reasonably small still. Yeah, good first half in both markets, poor second half in both markets. I think it’s a consumer sentiment issue rather than a loss of relevance. There’s no reason to think that we’ve lost relevance in either market. UK breads, I think we went down this route, having thought about a number of others because in the end, it’s the most profitable thing for us to do. We pay the synergy benefit from this merger, which is very, very big and gives us a platform to move from there. Given the scale of the losses in Allied Bakeries, it would have been hard to have sold that business for any significant consideration.

To have done that, to have given it away would have been value destructive. We think that the platform that we create by merging the two supply chains will be a very strong one. We’ve got to wait for the CMA, of course, but I think it was a very rational decision.

William Woods, Analyst, Bernstein: Understood. Thank you.

Conference Operator: Thank you. We will now take the next question from the line of Grace Smalley from Morgan Stanley. Please go ahead.

Grace Smalley, Analyst, Morgan Stanley: Hi. Good morning. Thank you. My first one would just be on Primark margins. I know you’ve reiterated your guidance for this year, but just as you look ahead, could you comment on how you’d expect kind of Primark margins to evolve from here and the headwinds and tailwinds we should be taking into account as we forecast Primark margins for next year? My second question will be on space. I think for Primark, you’d previously said that you’d aim for kind of your medium-term growth contribution from space to be around the 4% to 5% mark, and this year was always expected to be at the lower end of that. Could you just confirm that you still see 4% to 5% as the right medium-term range and where we should expect that to land next year or whether that should, again, be at the lower end for next year?

My last question, sorry, also on Primark, would just be on the competitive landscape. We’ve heard from Inditex this morning that they are testing their lower price point banners, Lefties, into new markets. We just would be interested to hear your take on the current competitive landscape of Primark and any changes you’re seeing, if any. Thank you very much.

George Weston, CEO, Associated British Foods: Okay. Primark margin, and I’m going to share the answer to this with Joana, who’s sitting beside me here. There are currency tailwinds. We won’t see them really until the second half. There are, we believe, some opportunities for a company which is still where 90%+ of our sales are coming into Europe against the States to benefit from American retailers making different decisions or the American market looking less attractive for Asian suppliers. Joana, what else would you say about?

Joana Edwards, Interim Finance Director, Associated British Foods: We probably will see some tailwinds on freight. We have seen this year some tailwinds on stock loss, so there’s nothing more to signal there. We’re hoping to get even further under the skin of that. We continue to look at efficiencies as well, which are important because, as we said before, we want to invest some of that back into creating demand, not necessarily putting it into the overall margin level, which we have said we are comfortable with now. It’s back to pre-COVID. Yes, those tailwinds, there are some tailwinds, as you very rightly said, Grace.

George Weston, CEO, Associated British Foods: Space, I think 4% feels about right for next year. Into the future, we’ll see how, as you know, we’ve been very disciplined about not chasing space where it isn’t good space, and we’ll continue to do that. Yeah, around about 4%. The competitive landscape, Lefties is a very good operation. We’ve competed very successfully against them for many years in Spain, and I have no doubt at all that they have something to offer consumers in other markets as well. Just as we’ve competed well with them in Spain, we’ll compete well with them anywhere else. I think there is potentially a reduction in the competitive intensity from people using de minimis legislation that’s going to help us somewhat in the European markets. We hope the UK government gets its head around that as well.

Maybe there’s a little bit of a help going on from that same source in the U.S. Competitively, we feel in good shape.

Grace Smalley, Analyst, Morgan Stanley: Okay. Very clear. Thank you. Just to follow up on the margin commentary, if I put everything you said there together, clearly there are a number of tailwinds. At the same time, you also said you’re comfortable with the overall margin level that you’ve reached at the moment. Is the idea that you will be reinvesting some of these tailwinds back into the Primark business, or are you happy to let some of these tailwinds flow through to some margin expansion as we look ahead?

George Weston, CEO, Associated British Foods: I wouldn’t be modeling an increase in the margin next year. We’ve got a lot of plans around reinvesting, as Joana said, in demand creation.

Grace Smalley, Analyst, Morgan Stanley: Okay. Perfect. Very clear. Thank you very much.

Conference Operator: Thank you. We will now take the next question from the line of Monique Pollard from Citi. Please go ahead.

Monique Pollard, Analyst, Citi: Morning, everyone. Thank you for taking my questions. The first was just on the UK market share gain that you point out in your opening comments and in the statement. I just wondered if you could give us a sense of how much benefit you thought you got from Marks being down during the cyber and whether you think you can retain the share gains from Marks now that it’s back up and running. The second question was just to try and understand, in the agriculture business, you mentioned this lower contribution from the joint venture Frontier. I just wondered the scale of that lower contribution, please. The final question, again on agriculture, I’m just trying to understand whether agriculture needs to get rebased going forward, FY2026 onwards, to a lower level because you don’t have the byproduct of animal feed from Bevogo ethanol production anymore. Thank you.

George Weston, CEO, Associated British Foods: Yeah. Okay. No, we don’t think our share gain was down to Marks being offline. We watched the switching data, and we didn’t see anything that would indicate that that was going on. We think the share gain has been about excellence in women’s wear in particular, which continues as we get into autumn-winter ranges. We think maybe a little bit of sharpening up of price perceptions and then the consumer having a little bit more confidence than they had in the aftermath of last year’s budget. I think that that is why where share was about as unfriendly as it could have been. We think that that will, it’s hard to imagine a worse year for that business, and some of that at least will come back.

Yes, you’re right that Bevogo, the sales of Bevogo to particularly the dairy field, dairy sector have come to an end with the shutting of Bevogo. Probably worth between £2 million and £5 million to us. That’s the sort of scale. The agribusiness has been making kind of high 30s, low 40s. It’s not a wholesale rebasing we’d be advising you to consider.

Joana Edwards, Interim Finance Director, Associated British Foods: Yes. I think if I can add, the agriculture performance this year was impacted by one-offs. It’s below prior year both for the first half and now for the second half. As George said, there’s a weather impact of Frontier. The one-offs are significant, and therefore, those are not to be carried forward. As George says, I think that the figures that we’ve seen historically, there is the Bevogo impact, which is not very material for the overall agribusiness. This should allow us to go back to that sort of level that we had in the past.

Monique Pollard, Analyst, Citi: Understood. Very clear. Thank you.

Conference Operator: Thank you. We will now take the next question from the line of Georgina Johanan from J.P. Morgan. Please go ahead.

Monique Pollard, Analyst, Citi: Hi. Thanks for taking my questions. I’ve got a few quick ones, please. First of all, in terms of the reinvestment that you’re making in the Primark business, it would just be good to hear a little bit more about that. Obviously, we’ve seen the new marketing campaign in the UK. Is that more around communication of the offer, or is there actually some price investment going in as well, please? Second, just in terms of the strong performance that you’re seeing in the U.S., it would be good to understand if the stores were back in or were now in like-for-like growth in aggregate, please. I do appreciate there are subtleties around sort of base rollout and cannibalization and so on, but it would be good to understand that.

Finally, in terms of the Hovis acquisition, assuming that’s approved, what sort of timeframe is it for those synergies to come through, please? I think the synergy number that was quoted in the press was around £50 million or so. It would just be good to understand if that was a sensible number to be thinking about. Thank you very much.

George Weston, CEO, Associated British Foods: Okay. I mean, in terms of Primark reinvestment in consumer, yeah, some of it is price. You will have seen the Palazzo jeans at £12 as part of the denim offer, which we’ve been advertising. We’ve gone on air with specific range advertising in the UK for the very first time, and we’ll see what that does for us before we decide whether we’re going to do more. There’s a lot of investment in digital. There’s more paid marketing. There’s more search engine optimization going on. There’s also investment in capabilities. The Primark app is being trialed at the moment and will be available, we hope, in just a couple of months’ time. A wide range of reinvestment in both the systems that allow the digital communication to keep on improving and also some reinvestment in above the line and then selective price reinvestment.

We think that our price gaps are as strong as they’ve ever been. I think we think competitively that we’re very, very well placed. We’re addressing, or we have addressed, I think, the beginnings of perceptions around our pricing. It’s never reality, but we’ve been working hard in campaigns like Never Basic and also, I think, the jeans offer that is in stores now. U.S. like-for-likes, I’m going to say we didn’t talk about the like-for-likes when they weren’t great, and we’re not going to talk about the like-for-likes when they’re much better. Otherwise, I’d have to talk about them when they weren’t great again. We’re very encouraged by what we’ve seen in the second half, both in the performance of new stores and also in same-store sales. I’m going to take a vow of silence of where we actually are.

Hovis, we expect that the process with the CMA will probably take a year. Maybe we can shorten that because we believe the case we’ve got to put to them that this is in the consumer’s interest is very strong. To harvest the synergies, think of it, well, different waves of it, but we’d get most of them done in another year, and we’d get some of them done much quicker than that. There’s a bit of engineering to be done moving bread lines around and so on, and that takes a little while longer. It’ll be pretty quick, and we know exactly what we want to do. Sorry, the £50 million number, I think it’s bigger than that.

William Woods, Analyst, Bernstein: Not much.

George Weston, CEO, Associated British Foods: Not much, but that’s, yeah, same gang, but probably there’s upside to that £50.

Monique Pollard, Analyst, Citi: Thank you very much.

George Weston, CEO, Associated British Foods: Okay.

Conference Operator: Thank you. We will now take the next question from the line of Warwick Okines from BNP Paribas Exane. Please go ahead.

Warwick Okines, Analyst, BNP Paribas Exane: Thanks, Monique, George, and Joana. I’m afraid I’ve got three as well. Apologies. Firstly, just to be a bit more direct, do you think you will have average selling price deflation next year in Primark? Secondly, do you think 2026 looks again like a year of higher gross margins in Primark funding operating cost inflation? There’s a part B to that. Could you tell us what you’re expecting for business rates, please? The third question is on sugar. A year ago, when you were contracting at this time of year, you said that the prices were down as much as €300 per ton. Where are you now? Is that a bit higher year on year? Maybe you just quantify that. Thanks very much.

George Weston, CEO, Associated British Foods: Okay. Selling price deflation, no, I don’t think we will see it. If we need to move our prices down, we will. I go back to the answer I gave to Georgina. Our price points are exactly where they need to be. Our price gaps are exactly where they need to be. Higher gross margins funding higher costs. Yeah, to some extent, labor costs in markets are up, but we have a lot of self-help too. Self-checkouts, for example, improvements in supply chain efficiency, improvements in internal data transfer, all these things help reduce our cost base. There’s not a lot of inflation coming up in from the cost of goods and obviously currency. It moves around a bit, but we’re looking at the second half with a bit of a following wind against the dollar. Where do I expect business rates to go? I wish I knew.

I think it would make a lot of sense for the government to reverse its course on higher business rates or larger retailers subsidizing the rest. If you want a vibrant high street, you need the anchors to be in good shape, and the higher business rates act clearly against that. There was a last point on.

Monique Pollard, Analyst, Citi: Sugar prices.

George Weston, CEO, Associated British Foods: Oh, sugar prices. Yeah, they’ve gone up a bit, but not as far as we thought they were going to go. We thought more acreage would come out of beet growing across Europe. It didn’t. We took our acreage down a bit in other areas in continental Europe. The beet acreage actually went up. I’m not sure how rational some of those decisions that led to that were. In Spain, we’ve obviously taken out processing capacity in shutting two beet factories. There is other processing capacity that is being taken out in other parts in Europe. Fence is slowly returning to the market. I thought it would come back quicker than it has. That’s why I made the comments about these much lower prices being temporary. They are still temporary. They’re just longer.

Warwick Okines, Analyst, BNP Paribas Exane: Got it. Thanks very much, George.

Conference Operator: Thank you. We will now take the next question from the line of Richard Chamberlain from RBC. Please go ahead.

Richard Chamberlain, Analyst, RBC: Thank you. Morning, team. I wondered if actually, I’ve got three, sorry, to continue the trend. Starting off with Primark, George, I think the statement says that Primark sales were softer in a weaker German market in the second half. I wondered if you saw a big difference in Q3 and Q4 trends in Germany. That’s the first one. The second one is around Primark advertising in denim weekend campaign. Is that a sort of precedent for other markets or other parts of the business? Should we expect now a sort of more permanent step up in marketing costs? Finally, back on the sugar side, I just wondered if you guys can give a bit more color on the sort of moving parts for the sugar profit bridge into next year.

It sounds like you’re targeting a small profit overall, but I was wondering how, you know, Ilovo might play into that. I guess following on from Warwick’s question, how much of a drag could pricing be into next year? Thanks a lot.

George Weston, CEO, Associated British Foods: Yeah. Okay. Do you have the Q3, Q4 Germany split? You’re not exactly down in the weeds, but I don’t have it in my head. That’s three and that’s four.

Monique Pollard, Analyst, Citi: That’s three. That’s four. Yeah.

George Weston, CEO, Associated British Foods: That’s four. Yeah. Q4 was worse than Q3. Okay, both were negative. After a very strong first half, albeit helped by the tailwind of the strike of the previous year being resolved, Q3 was mildly negative, Q4 rather more so.

Warwick Okines, Analyst, BNP Paribas Exane: Great. Thank you.

George Weston, CEO, Associated British Foods: That’s that one. Marketing campaigns, we’re convinced that we have to work harder to get the attention of shoppers and more generally, but particularly in an environment where consumer confidence is not great. I think our investment in consumer-facing activity, whether it’s digital or whether it’s above the line, will be higher in the future than it’s been in the past. As to on-air advertising of a particular range, denim in the UK in this example, we’ll just have to see how that works for us. Early signs are good, but we won’t do it again if it doesn’t increase our profitability. There’s lots of other investments in consumer relationships and the systems that support it. As I said, the app is coming and coming quite soon. There’s more search engine optimization work going on. There’s more paid media going on online. That works for us. That’s working for us.

If I then go to the profit bridge of sugar, essentially, margins in both Spain and the UK are a little bit better, but still very soggy. In Spain, we’ve taken a great hack to our cost base. There’s another one coming. If the most efficient and historically profitable part of the European sugar processing world, which is British Sugar, is still not making a proper return, then Spain won’t be either. It is a pricing issue. As I say, UK will be a bit better, but not dramatically so. We’ve obviously got lower beet prices and then lower beet prices in the year ahead. Equally, some of the two-year price deals, which held over until the year just gone, have now fallen away. Net pricing actually hasn’t moved all that much, even though the headline one-year pricing is up a bit. Africa’s going well.

It’d be great to have Tanzania up and running. We’re probably a month and a half away from making sugar, but you know these are beasts to commission, so that might take a while. Zambia really good. Malawi really good. Eswatini really good. Ilovo is in great shape. It’s a European pricing issue caused by oversupply in the European market. It’s a commodity business. This stuff happens from time to time.

Warwick Okines, Analyst, BNP Paribas Exane: Sure. Okay. Thanks a lot, George. Appreciate it.

George Weston, CEO, Associated British Foods: Great. Thanks, Regi.

Conference Operator: Thank you. We will now take the next question from the line of Anubhav Malhotra from Panmure Liberum. Please go ahead.

Anubhav Malhotra, Analyst, Panmure Liberum: Hi, team. Thanks for taking my questions. I’ve got a couple on the sugar business. You’ve touched upon a lot of them during your answers previously, but a bit more deep analysis into those. In Tanzania, if I can ask, maybe give us color on what were the reasons for the delay because I guess you were expecting it to start in the second half of this year, and now it’s been delayed by a couple of months. Also on the same, how do you expect that production facility to ramp up to full production over what period of time? What sort of profit contribution do you think that ramp-up can help you make? I mean, broad figures, maybe. Obviously, you can’t give me an exact answer on that, I guess.

On the sugar pricing, on the European sugar pricing, I would love to understand compared to your views, which you last gave us in April, how the sugar price has evolved compared to what you thought at that time because I noted in the press release you have mentioned that they have been a bit lower than previous expectations. Just double-checking if they’re lower than what you had been expecting in April. The last one on Azucarera, just on the restructuring, potentially a broad figure on how much cost you have taken out of the business. If even at these levels, would the business now be like break-even or still loss-making at these sugar price levels? Thank you.

George Weston, CEO, Associated British Foods: Okay. Tanzania, I don’t want to sound defensive, but in a project that’s taken the best part of three years and started at the end of COVID, in a country where there’s not great infrastructure, to be a couple of months delayed, I think is not too bad. It is frustrating. When you’re nearly there, you want to be there. Ramp-up of Tanzania might be reasonably quick. We know how to run sugar factories. There’s a lot of equipment that we understand well that’s been put into this new factory. There’s not a huge amount of technical newness to it. I think that it’s one of these parts where we’ll get kind of 70% to 80% of the way quite quickly, in a matter of three or four months. The last 30% may take a year or so as we come to optimize processes.

Profitability, we’ve said that we’re spending over $200 million on this thing, and we wouldn’t have signed it off if we didn’t think we were getting a proper return for the risks that Africa has. Higher than our average returns across the rest of the group. There’s quite a lot to play for in that investment. European sugar pricing, I’m going to be in danger of repeating myself. Acreage didn’t come out as we thought it would. We still have to see whether the unusual weather has reduced yields across Europe, which would then take supply out. Early signs are that there might be some yield reduction, but not enormous. There’s been some disease, but not a lot. We’ll know much more both in terms of UK supply and European supply probably in the next six weeks or so.

There is capacity that’s come out of manufacturing across Europe, but I can’t hide the fact there’s too much sugar in Europe. Stock levels are also quite high. Even if we got supply well under demand, we’ve still got a stockholding to use up. Using up that stockholding will keep prices depressed for a little while yet. I don’t think, what it’s all coming back to is I think there’s some pricing improvement in the new campaign year, but it’s got a long way to go in subsequent years. Azucarera, no, I don’t think there’s a profitable sugar business in Europe at the moment. Azucarera has taken some tens of millions out of its cost base and quite a lot more still to go. Even having done that, it will still be loss-making because everyone in Europe is loss-making at these selling prices.

Anubhav Malhotra, Analyst, Panmure Liberum: Thank you.

George Weston, CEO, Associated British Foods: Okay.

Conference Operator: Thank you. We will now take the next question from the line of Sreedhar Mahamkali from UBS. Please go ahead.

William Woods, Analyst, Bernstein: Good morning, George, Joana. Thanks for taking my questions. Only a couple. Just maybe going back to Primark, can you perhaps talk to the analysis that you do to reassure yourselves on the weak like-for-likes in terms of consumer demand versus sort of homemade cannibalization and how you analyze that and how that’s sort of fendered over the past year by quarter? If you’ve got some insights, that would be very helpful. Secondly, on grocery, George, I think the statement draws attention to good growth in international brands, clearly flagging U.S. brands, local brands’ performance there. Just can you expand a little bit more here and also give us some ideas in terms of how we should think about the year ahead in terms of growth in the division and profits? Thank you.

George Weston, CEO, Associated British Foods: Okay. Weak like-for-likes, you look at the market share data and you triangulate. Those are the two big ones. What are other people saying about their own performance, other people who are supplying a similar part of the market? In some countries, we’ve got better share information than in others. In the UK, for example, we’ve got good share information. As we made clear in this statement, our share performance in the second half in Primark has been very good, even if the headline, I mean, the headline like-for-likes are so much better, but the consumer remains weak. In some of the other markets, France, Italy, we have less good market information. We have some, and we have the reader cross. We’re very comfortable, for example, that particularly outside Paris, everyone is finding the consumer in a pretty bleak place. That’s what we do.

It’s a company where internal communications are pretty good. There’s a rich seam of anecdotal that turns into kind of directional information that comes up from the businesses and what they’re seeing in their shopping centers and their high streets and amongst their competitors. It’s an industry where people, where shopkeepers do talk to each other, and we get a sense of what’s going on. Grocery.

Monique Pollard, Analyst, Citi: Sorry, George.

George Weston, CEO, Associated British Foods: Yeah, sorry.

Monique Pollard, Analyst, Citi: If I may, on your point about how we look at cannibalization as well.

George Weston, CEO, Associated British Foods: Sure. Thanks, Monique.

Monique Pollard, Analyst, Citi: Just because, and I think your question goes to, are like-for-likes always the measure we should be using in every market? The answer is no, which is the reason why we don’t have like-for-likes figures for some of our markets. How we think about that as well is for some of our markets, we have got lots of white space. In fact, for a lot of our markets, we still have a lot of white space. Adding stores and looking at it as a total market makes sense. For example, in Portugal, where we’ve opened three stores this year, which is 30% more than we had before, because we had 10 stores. Having those three stores was something we had been looking for for a while, right, George, because it’s a country where every store is quite acquitted. It’s a very profitable market.

We wouldn’t look at a like-for-like in that case. We would look at, are we overall better off? Do those stores in the context of their capital approval levels make sense for that market? I don’t know if that’s where your question was going as well, but I thought it was important to give that extra closure.

George Weston, CEO, Associated British Foods: Yeah. Joana, having made that absolutely correct and very sensible remark, I’ve spent 20 years trying to persuade some people that there can be good negative like-for-likes, particularly in a process of rolling out. I’ve failed in some cases. I’m sure there are some of you who will be sitting here going, actually, no, there’s no such thing as good cannibalization. There is. Grocery has been good. Twinings in particular has had a strong sales year and has momentum into next year. We’ve had cost pressures in Ovaltine with chocolate costs that we’ve been dealing with. I think the worst of those pressures is behind us. The price adjustments to compensate for those have been taken, and all the collateral battles that a company that pricing has been fought in there in the past. Grocery good.

Achatums, so balsamic vinegar, we know where the tariff level is going to be in the U.S. now with more certainty than we’ve had through most of the second half. The work to recover the cost of tariffs is largely behind us. That’s good. UK grocery businesses have been fine, and in some cases, good. We’re very comfortable. Australia grocery, the consumer has been in a difficult place. Australian consumers, we think, are coming out of that. We hope to get some growth out of the Australian market next year. The U.S., the last one that’s worth picking up, we have a very large share of Hispanic consumers in Missoula. There’s a lot of fear in that community leading to expenditure declines. We’re facing into that too. We really hope that that’s temporary for all sorts of reasons. Missoula volumes, market share of Missoula really, really good.

Absolute sales affected by reduction in the propensity to purchase of some of the Hispanic populations in the south of the country.

William Woods, Analyst, Bernstein: Thank you.

Conference Operator: Thank you. As a reminder, to ask a question, you will need to slowly press star one one on your telephone. We will now take the next question from the line of Ashton Olds from Redburn Atlantic. Please go ahead.

Ashton Olds, Analyst, Redburn Atlantic: Hi, guys. I’m going to painfully ask three questions as well. First.

George Weston, CEO, Associated British Foods: Everyone, please ask. I don’t know why you’re apologizing for three questions this time, Rahm, because we always get three questions.

Ashton Olds, Analyst, Redburn Atlantic: Yeah, exactly. I guess the first one just on tariffs. You’ve mentioned that you’ve done some work on pricing both in food and Primark. I’d just like to clarify whether you’re expecting to offset all of the tariff cost. If so, is it about rebuilding % margins or just gross profit dollars? The second bit is just around Click and Collect and the contribution from that, whether it’s, I think in the past you’ve mentioned that you expected 1% of a like-for-like boost or so from Click and Collect. Is it at that level yet? I guess the initial learnings from rolling it out across all of your stores in the UK. The final question, I’ve seen you’ve negotiated beet prices for FY2027 and some back of the envelope math points to about a £20 million cost tailwind. Is that roughly right? Thank you.

George Weston, CEO, Associated British Foods: Because it’s the quickest one to answer. Beet prices, yeah, you’re about right. It’s about every pound of purchase cost is about what we’re buying, 7 million tons of beet, give or take. Tariffs, we’re just after the cash cost recovery, not the gross margin, not the margin percentage. We’ve got, give or take, in the food businesses, most of it back. There’s still a little bit to go in some areas, but we’re in small numbers of millions of pounds that we still need to recover. Most of that work has been done. Now done in a world where we understand the tariff rate from Europe and from the UK into the U.S. There’s still some movement around with ingredients we’re buying from China into the specialty ingredients companies in the U.S. There’s a little bit of uncertainty there still, but it’s, again, reasonably small numbers.

We haven’t moved the prices yet for Primark to recover the tariff effects for that business, but we’re actually doing so, starting the process of doing it this week. We’re watching our major competitors moving their prices too. We feel pretty comfortable that although there may be some consumer pushback, we’re not going to lose our competitive position through taking those steps. Click and Collect, yeah, I think 1% is still a pretty good number. No, we’re not up to 1% yet. We only got the capability fully rolled out in GB June, yeah. It’s been a small number of months until it was available to everyone. Pushing the consumer awareness up wasn’t the right thing to do. It is now we’re doing it. We’re also in a better place to work out. Click and Collect helps two sets of consumers.

One set is those that find it more difficult to get to the high streets, and they can get certainty that if they want something, they can buy it online and it’ll be there. That’s great, particularly those consumers who don’t have access to the full range that’s available in a big store. Perhaps their local store only has a proportion of the range. The range for them has effectively expanded because of Click and Collect. That effect we’re seeing and seeing well. There’s a second sale that we’re after, which is about extending ranges. Leg sizes in jeans, for example, will be more available on Click and Collect and in some other product areas. There’s a sizing ranging. We can keep swimwear available throughout the year on Click and Collect where we need the space back in stores, shoppers, and other things.

All that experimentation is underway, but it is not complete yet. There’s more to come from Click and Collect, but I think that 1% LFL remains a pretty good number.

Ashton Olds, Analyst, Redburn Atlantic: Right, thank you very much.

George Weston, CEO, Associated British Foods: Thanks, Ashton.

Conference Operator: Thank you. There are no further questions at this time. I would like to hand back over to George Weston for closing remarks.

George Weston, CEO, Associated British Foods: Look, I think we’ve had a good knock around most of the business, Primark and sugar in particular. Sugar will come back. We’re frustrated that it’s slow, but it’ll probably take another year. We do, in the UK in particular, have a great sugar business. In Spain, we’re making what we have better and better. Don’t forget ingredients. It’s had a good year, and it’s got lots of growth potential ahead of us. We hope the consumer, in European consumer in particular, will feel more confident at some point in the future. When that happens, we think we’ve got the offer to drive good like-for-likes again. The investments, increasingly, the high level of investments, particularly in food, are increasingly commissioning now. We’ll see the benefits of those both in this year and then particularly in the year after. There’s lots going on.

We’ve tackled what I could sloppily call the problem children. We’re looking to next year with enthusiasm. Not that there isn’t a difficult environment to trade in, but we have a lot of confidence in the businesses. Let me stop there. Thank you all for attending this meeting. We’ll speak again, I think, in November.

Monique Pollard, Analyst, Citi: Yes.

George Weston, CEO, Associated British Foods: Good, thank you.

Monique Pollard, Analyst, Citi: Thanks, everybody.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

George Weston, CEO, Associated British Foods: Thank you.

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