Associated British Foods H2 2025 Trading Update: Primark Excels in US Amid European Challenges

ABF H2 2025 trading update: what stood out and why it matters

Associated British Foods has set out how the second half of its financial year is shaping up ahead of results on 4 November. The headline: Primark is still growing, but almost all of that growth is coming from new space and the US. Food businesses are steady with some bright spots, while Sugar remains the problem child and is being reshaped decisively.

Unless stated otherwise, all sales growth figures are at constant currency and versus the same period last year.

Key numbers at a glance

Primark H2 sales growth	\~1% (Q3 1%, Q4 projected 1%)
Primark H2 like-for-like sales	\~2% below last year (Q3 -2.4%, Q4 projected ~-2%)
Primark FY25 sales growth	\~1%, with store rollout driving around 4% sales growth
UK and Ireland H2 sales	~+1%; market share up from 6.6% to 6.8%
US H2 sales	~+23% (Q3 +21%, Q4 projected +24%)
Spain and Portugal H2 sales	~+2% (Q3 broadly flat, Q4 projected +3%)
France and Italy H2 sales	~-4% (Q3 -4%, Q4 projected -4%)
Central and Eastern Europe H2 sales	~+9% (Q3 +17%, Q4 projected +4%)
Northern Europe H2 sales	~-2% (LFL ~-1%)
Grocery H2 sales	In line with prior year
Ingredients H2 sales	Broadly in line; profit slightly ahead of prior expectations
Sugar FY adjusted operating loss (incl. Vivergo)	Close to £40m
Sugar FY segment adjusted operating profit	Close to breakeven; sales down \~10%
Restructuring and impairments (Vivergo and Spain)	\~£200m, with \~£50m cash costs

Primark: US flying, Europe mixed, UK steadier

Primark’s H2 sales are expected to rise around 1%, with like-for-like sales – industry shorthand for sales from existing stores excluding openings and closures – down about 2% versus last year. That says the growth is largely expansion-led, not demand-led. Even so, the full-year adjusted operating margin for Primark is expected to be broadly in line with last year. Note that H2 margin will be lower than H1 due to the timing of one-off benefits earlier in the year. Adjusted operating profit margin strips out certain items to give a clearer view of underlying profitability.

Regionally, the UK and Ireland improved, with H2 sales up around 1% and market share rising from 6.6% to 6.8%. Click and Collect now covers all 187 British stores and, excluding the benefit of estate changes, like-for-like in the UK and Ireland was close to flat in H2 (down 0.7% in Q3 and broadly flat in Q4). That is a solid outcome in a soft market.

On the continent, the picture is patchier. Spain and Portugal edged up around 2% in H2, helped by new stores, but France and Italy are down around 4%. Northern Europe is expected to decline around 2% in H2, though restructuring in Germany and the Netherlands has improved sales densities and profitability. Central and Eastern Europe remains a growth engine at around 9% in H2, driven by recent openings.

The star is the US: sales up about 23% in H2 as the value proposition resonates and the space expansion continues, including four new stores and the first in Tennessee. Primark also opened 15 stores across the Group in H2, completed 22 refits, and laid the groundwork for its Middle East franchise – one store in Kuwait in October 2025 and two in Dubai in early 2026.

My take: Primark’s model is doing what it should in a cautious consumer backdrop – hold margins, grow space, and push digital services that drive footfall. The US momentum is a clear positive. The watch-out is Europe, where like-for-like softness persists.

Grocery: steady overall, with notable brand performances

Grocery sales in H2 are expected to be in line with last year. Twinings delivered good volume-led growth thanks to marketing, execution and innovation. Ovaltine grew through pricing in response to higher cocoa costs and portfolio expansion. In the US-focused businesses, consumer oils were lower as expected, though market share held.

In Australia and New Zealand, brands performed well, with a contribution from the acquisition of The Artisanal Group. In the UK, Allied Bakeries had lower sales and an operating loss in a challenging market, again as expected. ABF has agreed to acquire Hovis Group Limited, subject to regulatory approval, to combine production and distribution, target significant cost synergies and enable innovation.

Guidance nudges down slightly here: Grocery adjusted operating profit in H2 is expected to be slightly below previous expectations, mostly due to one-off restructuring costs. Strategically, the Hovis deal could be a turning point for UK bakeries, but integration execution and regulatory clearance are the near-term hurdles.

Ingredients: quietly delivering

Ingredients sales are expected to be broadly in line with last year, but profit is set to be slightly ahead of previous expectations. AB Mauri showed good underlying growth and benefited from last year’s speciality yeast and technology acquisition. Currency devaluation and easing inflation in Argentina muted reported sales growth. ABF Ingredients performed well overall, particularly in enzymes and health and nutrition.

In short, a neat, low-drama contributor with a small upgrade to profit expectations.

Sugar: restructuring to reset the base

The big structural move is the closure of the Vivergo bioethanol plant after the UK Government did not provide the solution required for consistent profitability. Including Vivergo, the Sugar adjusted operating loss for the full year is expected to be close to £40m. The loss from Vivergo will sit within ‘disposed and closed’ operations, so the Sugar segment itself is expected to be close to breakeven, with sales down around 10%.

H2 was tough in the UK and Spain, with persistently low European sugar prices and high beet costs hammering sales and profitability. In Spain, ABF is reducing its beet manufacturing footprint to remove structural costs and improve efficiency. Across Vivergo and Spain, expect around £200m of restructuring and impairment charges, with around £50m cash costs incurred this year and into next.

In Africa, performance was mixed: good growth in Malawi and Eswatini, while Zambia and South Africa are only just recovering from droughts. Tanzania remains pressured by high imports. A new sugar mill is close to commissioning, expected in the first half of FY 2026.

Looking to 2026, management expects some improvement in Sugar profitability, helped by contracted lower beet prices in Europe, though lower-than-expected sugar prices will delay the recovery. Translation: progress, but do not expect a quick fix.

Agriculture: a modest top line, weaker profits

Agriculture sales are expected to increase around 1% in H2, driven by speciality feed and additives, with compound feed broadly flat. However, adjusted operating profit in H2 is expected to be significantly below last year due to a lower contribution from Frontier, the joint venture, after exceptional weather, plus one-off costs.

This is a reminder that weather risk and JV contributions can swing segment profits even when sales hold up.

Outlook, risks and what I am watching next

• Consumer backdrop: ABF expects the environment to remain uncertain. Primark will likely keep leaning on new space, digital engagement and tight cost control to offset softer like-for-like in Europe.
• US momentum: 23% H2 growth is impressive. The question is sustainability as the store estate scales. Early signs are good.
• UK bakeries: the Hovis acquisition, if approved, could unlock meaningful cost synergies and stabilise Allied Bakeries. Integration plans and timing will be key.
• Sugar reset: the £200m restructuring and impairment charges should lower the cost base, but pricing remains the swing factor. Watch the pace of recovery into 2026.
• Margins: Primark’s full-year adjusted operating margin is guided to be broadly in line with last year, though H2 is lower due to phasing. Investment in product, brand and digital is stepping up – sensible, but it needs to pay back in footfall and basket size.
• Cash impacts: around £50m of the Sugar-related charges are cash costs across this year and next. Capex and cash conversion at the full-year will matter.

My view on the update

This is a pragmatic, workmanlike update in a cautious market. Primark’s US outperformance and UK stabilisation are genuine positives. Europe ex-UK remains soft, but estate actions are improving density and profitability. Grocery is steady with self-help via Hovis. Ingredients nudges up. Sugar is taking the pain now to set up a better base for 2026.

Net-net, I see a balanced story: operational resilience and strategic action set against macro drag in Europe and a slow Sugar recovery. The share price reaction will likely hinge on confidence in the Primark US runway and comfort that the heavy lifting in Sugar is now mostly behind them. Full-year numbers on 4 November should give the margin detail and cash picture to firm up that view.