Associated British Foods Mulls Grocery, Primark Separation

Credit: Henry Saint John/Shutterstock.com

Associated British Foods is reviewing nan make-up of nan UK group, a move that could spot nan institution abstracted its Primark unit limb from its nutrient operations.

The Tip Top breadstuff and Jordans granola shaper said coming (4 November) it had been carrying retired a reappraisal of its building “with a position to maximising semipermanent value”.

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“Although nary determination has been taken, nan result of this reappraisal whitethorn lead to nan committee deciding to undertake a separation of nan Primark and Food businesses,” ABF said. “This reappraisal is being conducted successful consultation pinch ABF’s largest shareholder, Wittington Investments, which remains committed to maintaining mostly ownership of some businesses.”

ABF’s nutrient businesses see its grocery, ingredients, agriculture and sweetener business units. The company’s market business besides houses nutrient brands specified arsenic Blue Dragon cooking sauces, Mazola cooking lipid and Twinings tea.

Chief executive George Weston said: “Within ABF we person 2 awesome businesses but 1 beardown civilization of semipermanent worth creation driven by nan dedication and excellence of our people.

“Our unsocial and exceptional nutrient business has historically been little good understood by nan financial markets than Primark, yet it has a highly charismatic portfolio, heavy world expertise and overmuch potential.

“Primark has an incredibly beardown world brand, a powerful customer proposition, and important maturation opportunities.”

The reappraisal was announced alongside nan publication of ABF’s financial results for nan twelvemonth to 13 September. Revenue was down 3% astatine £19.46bn ($25.43bn) and 1% little connected a constant-currency ground arsenic maturation successful unit was offset by falling income from nan group’s sweetener business. ABF’s unit income were up 1% astatine £9.5bn.

Within nan company’s market division, ABF’s world brands saw “good income growth”, though this was offset by nan group’s Allied Bakeries limb successful nan UK and its US oils businesses.

In August, ABF announced a woody to acquire nan Hovis breadstuff business from UK headquartered private-equity patient Endless.

Total operating profit fell 23% to £1.5bn. Adjusted operating profit dropped 13% successful existent rate and 12% successful constant-currency position to £1.7bn, attributed to little net from sugar.

ABF president Michael McLintock added: “Given nan standard that Primark has now attained and nan request for amended knowing of our nutrient businesses, nan committee has been undertaking an in-depth reappraisal of nan early style of ABF to measure whether a separation of nan Primark and nutrient businesses would beryllium a amended building successful nan years ahead.”

For nan company’s 2025/2026 financial year, ABF said it expected nan world brands successful market to spot “good maturation successful income and profit”, helped by finance successful trading and merchandise innovation. The institution added it expected nan maturation to beryllium offset by little volumes and profit from US oils, meaning profit adjacent twelvemonth would apt enactment “around nan aforesaid level arsenic 2025”.

On nan outlook for ABF, Weston added: “Looking ahead, we are assured successful nan group outlook for 2026 though overmuch depends connected nan user environment, which is peculiarly unpredictable astatine nan moment.

“Our beardown equilibrium expanse underpins disciplined finance arsenic we proceed building brands and businesses that will present maturation complete nan agelong term.”

In a statement to clients coming (4 November), Barclays analysts described ABF’s imaginable business divided arsenic “a affirmative surprise”, adding it shows nan business wants to bring its foods and ingredients section “out of nan shadows”.

They stressed ABF does person immoderate agleam spots successful its foods business, specified arsenic successful grocery, “where we person agelong based on that its Ovaltine/Twinings is simply a jewel which benchmarks good against nan very champion nutrient assets around”.

The group’s UK bread, Spanish sweetener and Australia market business “seem to person tarred nan full non-Primark businesses”, nan analysts said.

Debating really guidance whitethorn alteration if nan divided goes ahead, nan Barclays analysts said they thought CEO George Weston could beryllium picked arsenic nan caller main for nan nutrient business, leaving abstraction for a caller main executive to beryllium appointed to lead Primark.