Associated British Foods plc

My microphone apparently is live. Look, thank you all very much for coming in. We believe there's something else going on in London, or so Chris's taxi driver said. So we're very pleased to see you here at anyone's online as well. Thank you for joining us for this review of ABF's interim results. for the 24 weeks ending the 1st of March 2025. I really am delighted to be joined by Joanna here, Joanna Edwards, who's our Interim Finance Director. Joanna has been ABF's Group Financial Controller since 2020. She knows the whole of ABF extremely well. as only I think a finance controller really can. She has very strong relationships with finance directors across the group. She's also, and I won't spare her blushes, she's a class act. She will be an excellent interim CFO and she'll be giving her detailed review of our financial results shortly. I've also invited Owen to join us this morning, not to put Joanna right or to support me in particular, but to give you his early perspectives on what he's seeing at Primark that he's now running and also some idea of what he's up to. And I hope, again, that he reassures you that life goes on and perhaps there are even added benefits. Let me briefly go through our results for this half year. Sales were in line with last year, but group adjusted operating profits were down 10% and adjusted earnings were down 8%. These figures mask a number of moving parts inevitably and a mix of performance across the businesses. I can't pretend that I'm anything but really disappointed with the results of sugar, which made an operating loss in the first half. The rest of the businesses, though, did deliver a robust performance with good profit growth. and strong margin delivery in retail, grocery and ingredients. We've kept our interim dividend in line with last year. We have a great deal of confidence about the future performance of this group. And let me then share a bit more color with you. Primark delivered good sales growth in Europe and the US. Consumer caution in the US was a continued theme through the first half in the UK. But the profit and margin delivery was strong. And I think it demonstrates our low cost model is working well. Our grocery and ingredients businesses had a good first half. We continue to benefit from multi-year investments we've made to drive long-term growth. And we continue to make more of these investments. The area of weak performance, though, of course, was sugar. And really, there are two explanations for it. As expected, lower sugar, European sugar prices combined with high beet costs had a significant impact on the profitability of of our businesses in the UK and in Spain. And in the event, and we hold our hands up, prices went even lower than we had anticipated. When the market is falling, it's quite hard to call the bottom and we missed it. So that is margins in European sugar. The prices of bioethanol were also significantly lower than we had any reason to expect. And that meant we had an operating loss in Vivergo. Let me be clear. We know exactly what we do need to do to improve the profitability in these businesses, in particularly in Spain and in Vivergo. And the actions to deliver the operational and in the case of Vivergo, the regulatory solutions are already in progress. And I'll come back to these in some detail later on. Across the group, then, we've continued to make, I think, disciplined investments in long-term growth projects, and I'll share some of those with you, and our balance sheet remains strong. We've also made good progress on our current share buyback programme, completing £422 million of share buybacks in 2025 to date, with a further £169 million to be completed in this financial year. And with that, I will hand over to Joanna.

Thanks, George. Good morning, everyone. Let me take you through the results in a bit more detail. Group revenue was 9.5 billion, which was in line with last year at constant currency, with sales growth in retail and ingredients offset by a decline in sugar. Group adjusted operating profit was 835 million. This is a decrease of 10% at constant currency, and at actual rates, the decrease was 12%, with an adverse translation impact of 31 million, driven by the weakening of both the US dollar and the Euro against sterling, but also movements in some of the African currencies. As you can see, As with revenue, we had good results in retail and ingredients, offset by the decline in sugar. And I'll go into the detail behind that in a moment. Margin. I am really pleased with the strong operating margins in retail, grocery and ingredients. Of course, the loss in sugar means overall group margin was down from 9.8% to 8.8% this year. So let me take you through the performance drivers by segment, starting with retail. In this half year, revenue grew 1%. Our key growth markets delivered good growth, particularly in Iberia, France, Italy, Central and Eastern Europe, and the US. Sales in the UK and Ireland dropped by 4% in a challenging retail environment. Adjusted operating profit increased 8% from 508 million to 540, and operating margins strengthened from 11.3% to 12.1%, driven by a strong improvement in gross margin and good cost management, while investment continued in product, digital and brand initiatives. Our outlook for retail for the full year is unchanged. We continue to expect low single digit sales growth in 2025 and operating margin to be broadly in line with 2024. This does assume a slightly lower margin H2 2025 compared to this first half, largely due to the phasing of one-off costs over the year. Moving to grocery. Sales were in line with the prior year. Adjusted operating profit increased 1%, with adjusted operating margin increasing to 10.9%. Our leading international brands and regionally focused businesses performed well overall, benefiting from continued investment in effective marketing and excellent commercial execution. These figures also include the consolidation of our recent acquisition, the artisanal group TAG in Australia. Performance in our UK focused business declined overall. This is as expected and was primarily due to lower sales in allied bakeries. George will talk about the actions we are taking in that business in a moment. Overall growth in our US-focused businesses was impacted by the normalisation in sales in the US oils. Again, this is as expected. There's no change to our outlook for grocery, with drivers of performance in H1 expected to continue for the remainder of this year. In ingredients, we continue to be pleased with performance. we've seen a further improvement in profitability with adjusted operating profit up 8%. Our yeast and bakery ingredients business delivered robust sales and margins benefiting from our strong routes to market and broad product portfolio. In specialty ingredients, most of the portfolio performed well and we had particularly strong growth in our enzymes and health and nutrition businesses. Sales in our pharmaceutical businesses were lower, however, due to softer demand in certain product categories. We continue to invest in R&D, commercial capabilities and strategic capital projects to drive long-term growth. Our outlook for ingredients like for grocery for the full year is unchanged, with continued growth over the remainder of the financial year. Performance in our sugar business was challenging. Sales declined 4% and the segment had an adjusted operating loss of 16 million for the half. In the UK and Spain, sales and profitability declined significantly as a result of lower European sugar prices and high cost of beat for 23-24 campaign. We had expected these dynamics, but as George said, the recovery in sugar in the sugar prices is slower than what we had hoped. Our Spanish business Azucarera, the deterioration in market conditions has demonstrated that our cost base is structurally too high. And we are assessing a number of restructuring scenarios. we recognised a non-cash impairment charge of 101 million in these first half results. In our African operations, the performance was strong in Malawi and Eswatini and aligned with expectations. We faced challenges in Tanzania from high levels of prior year sugar imports due to the delayed construction of our new sugar mill. In South Africa, performance was impacted by drought. Vivergo, our bioethanol plant in the UK, in there we reduced production in response to low bioethanol prices. This resulted in decreased sales and an operating loss. This is the impact of the current regulatory environment and George will take you through the details of this and how we plan to deal with it. As a consequence, sugar profitability for this financial year is now expected to be an adjusted operating loss of up to 40 million. George will talk more about the clear and specific actions we are taking to improve financial performance in sugar later. Moving now to agriculture. Sales declined 3%, largely due to compound feed prices. This being a cost plus business, lower commodity prices drove lower sales, and demand in the UK and China also remained soft. Most of our specialty feed and additives businesses performed well, and so did the dairy business. Adjusted operating profit decreased 8% to 12 million, but this was as a result of one-off costs. The profit contribution from our joint venture frontier declined as a result of less favourable marketing conditions for its grain trading business. I would like to point out that excluding the one-off costs, adjusted operating profit would have grown in the half. And so we expect profit to be higher in the second half for this segment. I wanted to include the next slide to show the group's revenue split by geography, which is detailed in Note 1 of the RNS. The point I want to make here and highlight is the group's relatively modest exposure to the US. You can see that 13% of our revenue is in the Americas and 9% of it is in the US. With the proposed introduction of new US tariffs, we have done a lot of planning and detailed work to fully understand the sensitivities around this exposure. This is a very dynamic and fast changing situation, as we all know. But given what we know today, we do not expect the impact of US tariffs to be material for the ABF group. Moving on to adjusted earnings and adjusted earnings per share. Adjusted profit before tax benefited from a favourable year on year movement in other financial income I would like to note that in the first half of last year we had material losses on foreign exchange balances in African currencies. The adjusted effective tax rate increased from 23.2% in H1 2024 to 24.1% this half year. This upward pressure reflects changes in our profit mix this year, but it reflects as well the impact from the introduction of Pillar 2 tax rules, which increased our tax rate in Ireland. Adjusted earnings per share decreased by 8% to 83.6 pence per share and benefited from the reduced weighted average number of shares as a result of our share buyback programmes. Turning to our free cash flow for the half. Our free cash flow was 27 million. Capital expenditure of 0.6 billion was in line with H1 2024. There were no material acquisitions or disposals this first half of the financial year. So let me explain the working capital movement. This year, the working capital outflow of 318 million reflects the normal seasonality of our business, which is largely driven by sugar. I want to remind you that this compares to a working capital inflow last year, and that was unusual. It was due to a normalization of working capital levels in Primark after the supply chain disruptions in the prior year. The level of cash tax was in line with H1 2024. And for the current financial year, we still expect cash tax levels to be moderately lower than in 2024 due to the benefit of unexpected state aid refund in the second half of this financial year. Moving on to the balance sheet. This is a strong balance sheet. And I want to highlight a few items. Firstly, intangible PP&E and other non-current assets have increased in line with our investments in CAPEX and acquisitions in the last 12 months. Secondly, working capital. This was broadly in line with this time last year when Primark inventory normalised. I want to point out here that the very sensible steps we're taking in the short term to minimise the impact of tariffs could impact working capital in the second half. Thirdly, the lower cash balance of 201 million reflects shareholder returns that we have made over the last 12 months, both in dividends and share buybacks. I will give more detail on those in the next slide. And finally, I really wanted to highlight the pension asset, which remains very substantial. So focusing now on cash and liquidity. Again, we are in a very strong position. At the end of the first half of this financial year, we had net debt including lease liabilities of 2.8 billion and leverage of one times. This is broadly in line with last year. Cash and total liquidity reflect the step up in shareholder returns, which included the declaration and payment of a special dividend of 198 million. the 100 million extension of the second share buyback and the current share buyback programme of 500 million, which we expect it to complete by the end of this financial year. Our capital allocation policy is to prioritise disciplined investment in the businesses to drive long-term growth. In the first half of 2025, our total investment therefore was 557 million. And I just wanted to point out that this is split around different segments of our group. Approximately 40% of that was in retail, where we continue to roll out stores, invest in our depots and add new technology. The remaining 60% was across our food businesses and a large amount of spend was on a number of multi-year projects to add new capacity and capabilities. George will talk in more detail about some of these investments shortly. Our declared interim dividend is 20.7 pence, which is in line with last year. In terms of share buybacks, we expect to complete 591 million in this financial year. We completed 359 million of buybacks in this first half by the 1st of March, with the remaining 232 million left to complete in the second half. I will now hand you back to George.

Right. Thank you, Joanna. And starting off then with Primark, where sales grew 1% in the first half. In Europe, we had good growth in our growth markets, Iberia, France, Italy, Central and Eastern Europe. Together, these markets are close to 40% now of Primark sales. Our proposition in all these markets is resonating well, and we've had good execution of our store rollout plan. In the US, we continue to make good progress. We had 29 stores at the end of the half with another 18 leases signed, and recent store openings are positively contributing to overall US sales densities. As I've said before, we see increased brand awareness in the US as probably the key growth driver. And we've recently completed a trial marketing campaign focused on the New York area, And we were pleased with the initial results. They showed an increase in metrics across awareness, familiarity and consideration. We built on those learnings in a second phase, which we launched last year. Clearly, tariffs are going to have an impact on all retailers importing products from China. And we've assumed some unmitigated cost in the second half of this year. I welcome, though, the removal in the States in particular of the de minimis exemption on Chinese shipments, which I think will be a positive for value retailers who operate in U.S. shopping malls. Turning to the UK and Ireland, it was a challenging half due to continued consumer caution, particularly amongst our lower-income shoppers, and this was exacerbated by mild autumn weather. However, we have had an encouraging pickup in UK trading over the last few weeks, and I'll talk in more detail about the UK in a moment. Finally, in Northern Europe, I'm pleased that the benefits of restructuring in Germany and some of the Netherlands are clearly visible in our performance. And in Germany, we continue to make progress on the longer-term project of improving brand perception in that very big market. Our core essentials remain at the heart of our customer proposition, and we're continuously reinforcing our price leadership and great value. You can see this most recently in the new value campaign that we launched only yesterday, Never Basic, which is now in store windows and online. Our spring-summer ranges have launched and look great. And people are planning holidays this year with early beach and swim sales ahead of last year and with luggage sales extremely strong. We've had a great early reaction to new season styles and lighter fabrics like linen across all women's wear, including collaborations. And our licensed product continues to drive excitement. Good luck trying to get hold of something from our new Guinness partnership. But whatever the weather, performance and leisure wear is what the world is wearing, and we continue to expand our offer and expand it significantly. Primark's more premium line, the edit, continues to grow very nicely, and we recently extended the label into homeware. We continue to invest in our digital channels and capability, meeting our customers where they are to create demand and ultimately to drive footfall into our stores. We're using these digital capabilities to amplify our organic campaigns, and a good example of this was our recent homeware campaign with Pinterest, where a more integrated approach drove very strong traffic to our website. We will continue to build sales growth through both our owned and paid digital channels. The UK, which of course is UK's, is Primark's largest market. It's just under 40% of sales. And it's more mature for us with just under 200 stores. But we firmly believe, for all that the market's been difficult in this first half, that we still believe that we've got plenty of opportunity to go after in the UK. Our market share remains resilient. Look at this chart on the right-hand side. We're above pre-COVID levels, and this reflects a lot of good work that we've done and continue to do to drive sales. The rollout of Click and Collect in Great Britain will complete this June. It's driving incremental sales and contributing to growth. We have no doubt about that. We're reaching new customers. We're also making an extended product range available to existing customers who shop in smaller stores. Over the last couple of years, on top of these, we've been more actively managing our UK store estate. This has included store relocations, extensions and a small number of new stores. These activities improved our UK sales by over two percentage points in this half year. We're also making good progress with our store refurbishment program. And over the last three years, we've completed 29 store refits in the UK and another 20 across the group. The store refits are about modernizing the stores that most need it and improving the store experience for our customers. We also include self-checkouts and LED lighting in all store refits, and those contribute to significantly lower cost levels. If that's the UK, then our growth markets. We're targeting new store rollouts to contribute between 4% and 5% to Primark's annual sales growth. This year, we have said it will be closer to 4%, and we remain on track for that number. We opened eight new stores in the half, and we have a good number more to come in the remainder of the year, and then a few that will continue. open in the very early part of next year. As I mentioned earlier, two of these new stores were in the U.S., including our first store in Texas, where the brand really has had a great initial reception. It's in a border town called McCallum. We're excited to have six other leases already signed in Texas. In Europe, we opened six new stores, including in Portugal, France, and Italy. And there are more stores to come in the second half in Iberia, Italy, and Romania. And please don't overlook the importance of our entry into the Gulf. We have a partnership with the Al Shaya Group to open stores in the region. We'll have more to say about the location and timing of our first store openings. We'll be saying that in just the next couple of weeks. We're really excited by it. These are big markets in their own right. And getting into franchising is about building an important new capability. which has the potential to open up other new markets in the future. We're supporting space growth with continued investment in our depots and in our supply chain. We think there's a lot of cost potential in those areas, cost reduction potential in those areas. As well as increasing capacity, we have a number of ongoing projects in our warehouses, either to fully automate them or to partially automate them, introducing labor saving tools. Primark cannot be a low-cost seller without a low-cost supply chain. We continue to drive cost optimization and efficiency then across our supply chain, our stores, and our central functions. And let me share a couple of examples. How many products we can get into each carton? How many cartons we can get into a container? How do we optimize our store delivery schedule? These are all areas of opportunity for a significant opportunity. And in our stores, we now have self-checkouts in 136 stores and a plan to reach close to 200 by the end of this financial year. Self-checkouts typically reduce labor hours by around 10%, and we can either redeploy some of that effort into the store, or we can use that cost saving to absorb typically labor cost increases without raising prices. Shoppers like self-checkout because they reduce queuing time, and actually the theft level through self-checkout is lower than it is through tills. LED lighting is now in over 300 stores. On average, it's reduced our energy consumption by 30%. It's quite a big number. And then improvements to our labor scheduling. Our labor model over the last few years have significantly reduced costs and helped offset inflation pressures. It's about getting the right person in the right place to generate more sales. This includes optimizing our store format, our store layout, and the scheduling of colleagues' hours. I was pleased in the first to see a slight improvement in stock loss in this half. It's still a very big number, but we have helped ourselves by the investments we've made in extra security measures, including CCTV, remote monitoring and increasing security guard hours in the right places. So to bring this all together, we continue to feel really optimistic about Primark. We continue to expect the full year margin in 2025 to be broadly aligned with 2024. And as I said in November, Primark is back to margin levels that we think are right and that we think are sustainable. This is with our prices being as competitive as ever, with our continued obsession in price leadership and with increased investment in things like digital. Our low cost model is working extremely well. We're making good progress with storm rollouts and a large number of other strategic initiatives that will follow. drive long-term growth. Owen has got himself much closer to a lot of these initiatives in just the last couple of weeks. And so let me pass over to him for a moment to tell you what he has seen in his early days as CEO of that business.

Thank you, George. And good morning to you all. It's great to be back as such. I'm now actually my fifth week in my new role. So it's obviously early days. Look, firstly, to say I'm really enjoying being there. It's a great business. I'll come back to that. I'll give you a few headlines of what I've seen so far. Look, the business has settled down really quickly following the management changes. I think in large part that is due to the strength of the Primark culture, which I'm seeing in spades through all my interactions every day. Now that I'm experiencing it from the inside, I'm even more impressed, actually, of the culture. It's a very dynamic and highly innovative culture. There's a great sense of team and a tremendous drive. People are passionate about performance and product. So it's a very exciting place to be. There's also a very strong leadership team in place and actually a broader leadership group as well. with a good balance of experience and skills. And I've already seen that there's actually a real depth in talent across the markets and across the functions in Primark. I always thought that was the case, but I really couldn't see it since I've come into the role. Look, there's a lot going on in the business to be excited about, as George says, across buying and merchandising, in the stores, in the store rollout, in digital and marketing, in supply chain and in technology. I'm confident all of these initiatives will set Primark on a path for sustainable growth, as well as driving performance and returns. Primark has a tremendous opportunity and then there's a lot going on and a lot to go after. Now, as Georgia says, already having lent into a few of these initiatives in the recent weeks, I can see the potential for how the business can actually move even further and faster. And that really is my role and my focus to enable the business to deliver on its exciting agenda more effectively and efficiently. And, of course, that's going to flow through, hopefully, to further updates that the team will give you in the coming periods. So that's all for now. I mean, in short, like I think my summary really so far is that it's a great business with a great opportunity, lots to deliver on the promise, but forming a clearer path to deliver. And with that, I'll hand you back to George. Good to see you all. Thank you.

I don't know how I move on to grocery. It's one of these kind of joins that doesn't quite work, but thank you very much. But I do now turn to grocery, where we've continued to make progress. International brands delivered good growth. Increased marketing investment is proving effective. Entwinings, notably. Commercial execution has been excellent. The quality of the advertising copy that we've been running, entwinings in particular, but also increasingly in retail. Ovaltine and then out into world foods has been really, really good. And we've had significant product launches that are also contributing to growth. I'll talk specifically about progress and twinings and Ovaltine in a moment. Performance in our U.S. focused businesses was broadly as we expected and had said they would be. We've had this ugly word, a normalization of sales in our U.S. oils business. We've actually maintained a higher than normal margin, higher than historic margin for longer than we'd expected because the price of raw oil has been coming down. And although we've been reducing our prices, and with that our sales have been reducing, actually our cash margin has held up really well. I think in the second half, we've we will be deliberately taking our margin down somewhat. But we've had, I think, an extra year of superior margins in Missoula than we had expected that we would. And that's been great. In the UK, we've had lower sales volumes in allied bakeries. If you remember, we lost a chunk of business with Tesco's about 10 months ago, and the improvements that we saw last year, which were quite encouraging, have disappeared this year. It speaks to the reality that this is a very challenging market. I've said it before. We're evaluating strategic options for allied bakeries against this backdrop. And we expect to provide an update on what those strategic decisions will be in the second half of this year. We're not going back to year after year of the sort of losses that we made before last year. And actually, we're not losing quite as much money and it feels controlled at the moment. But we have to do better than that. Finally, in Australia, we've benefited from some consumer recovery. The Australians were in a very miserable place, having seen their average disposable income go down for the first time since the early 1990s. Interest rates went up, pay rises lagged, inflation, and we saw a notable squeeze in consumer expenditure. Some of that is unwinding. Interest rates are coming down. pay is catching up and the Australians are in a better place. The integration of the artisanal group into the Australian business, and we're actually keeping it separate from Tip Top because it is quite a different specialty business. That integration has gone really well and the business at the moment, so far so good, is performing above where we anticipated it would be when we bought it, despite that squeeze in consumer expenditure. Turning then to twinings, we have been undertaking, we've been following a strategy for a number of years to really do two things. The first one is to maintain our presence in black tea. We don't want black tea sales to decline. fall away, even though the black tea market has been declining for a number of years. And at the same time, we want to take that Twinings brand and make it relevant to infusions, herbal infusions, and in particular, wellness. And you can see from this chart that that that wellness strategy is working well for us. Wellness beverages are a fast-growing part of the food and drinks category and we think that we are really well placed. The brand is really well placed to occupy a premium niche within it. I think sometimes, then moving to Ovaltine, I think sometimes people get Ovaltine in their mind as a powder that Granny used to drink before she sadly shuffled off her mortal coil. And in the UK, there may be some element of truth to that. Internationally, it really is a fabulous business. It's... The work in particular that the Swiss team have done over many years, you go back 20 years, to expand the brand into other categories has been startlingly good. Now, the first half of this year, we've got the headwinds of high cocoa prices. We've been having to push prices. In Europe, you get D lists and all sorts of problems. In Asia, you get elasticities working against you. So there have been headwinds for this business. But fundamentally, I think it's a really exciting set of opportunities that we've got. The breadth of the product portfolio is enormous. It resonates in food service extraordinarily strongly in Brazil in particular, which is the world's biggest milk modifier market. So that's great. Crunchy cream is going very well in Asia. And a particular product which is fairly new to the Chinese market is basically dipping pots with crunchy cream and a biscuit in it. That is growing like topsy at the moment. And we will be taking product from there elsewhere into Asia. So I think there is just a heap of opportunity there. in Ovaltine and we'll get at it. There's actually some Ovo breaks in your goodie bag. I think there's one goodie bag without it because we ate some of them yesterday. So bad luck if you don't get one. Okay, that's enough of a kind of bigging up of Ovaltine, but it's a lovely, lovely business. As I think is tip-top, which has managed the trick of firstly occupying the sort of premium parts of the bread market in Australia. Now, both the nature of competition and the nature of geography make this business, the bread business in Australia, a much more defensible area, if you like to use old terms. Someone else's terminology, the moat that you have in bread in Australia is completely different to what it looks like in the UK. But we've also got a very good presence in food service. Now, we can't get to the premium end, which is why we bought the artisanal group. But we are a very major supplier of buns, for example, into food service, which we don't have that business in the UK. The crumpet business in Australia is startlingly profitable. And we've got all these other kind of non-bread products that... that bring profit to Tip Top. One of our earlier investments back into the Australian bread business has been the installation of a new bun line in Queensland. We're out of capacity. The Australian population grows. Sliced bread doesn't necessarily grow because the mix of the population is changing. But everyone from wherever they come from eats hamburgers and hamburger buns. We're very well placed in that business and we've invested in that capacity just recently. The U.S. grocery business is a really strong one. Mazzola and Fleischmann's. Mazzola, we have the leading market share in oils. It's a bit miserable at the moment because our key customer is Hispanic and is feeling nervous. and fearful, and they're cutting back on expenditure. It feels really recessionary in parts of the US market. Fleischmann's, which is sort of anchored on yeast, but also has other bakery ingredients, has been extraordinarily strong all the way on from COVID, where some of the baking habit that we all adopted during COVID has stayed amongst the American consumers. The sales of Retail yeast, and we have a 70% share of that in the States, are way higher than they were pre-COVID. That's a lovely business. We've had tariffs applied twice to retail yeast because it's made in Montreal and taken off twice. So we have a bunch of stock that we kind of move when the tariffs were removed sitting in the States. We'll get our way through that. And for now, there is no tariff that applies to yeast made in Montreal. We also have a very nice part of the U.S. yeast business. We've got a factory also in Canada in the west of the country which supplies down the west coast to the United States. That doesn't have tariffs on it either. So the majority of our U.S.-focused brands are not subject to tariff. Oil is bottled in the States. Fleischmann's is not attracting tariffs at the moment, so that's good. That's about half. tea is attracting some tariffs and some ingredients going into our ingredients business. The states are currently tariffed as well. We'll just have to see where that goes. I wanted, because I haven't really talked about it, just to highlight Anthony's Goods, which is a smaller brand we acquired back in 2019. It's based in California. It's a leading brand of organic natural ingredients and superfoods. It's built, it trades entirely online and And as I say, it's got this premium positioning. It's growing very fast. It's making significant profits for us now. The product innovation capabilities get better and better. I think it's got a long way still to run. Like all these online businesses, you start an online and then you think maybe you can get it into bricks and mortar. That might be the next stage for it, but it's worth calling out. And then finally in the U.S., a joint venture with ADM Stratus. where we supply largely oil to the food service ingredients and retail markets. So we do own label oil. Brand is obviously Mazzola, but own label comes through Stratus. It had a really good first half. It also acquired AA Foods. AAK Foods food service facility in New Jersey. Distribution and packing capability in particular has been weaker in the northeast. We've now fixed that. We've also bought a number of interesting kind of oil-based brands, mayonnaises, salad dressings, etc. OK, on to ingredients, which had a good half year, as we've shown you. Yeast and bakery ingredients business, AB Maori, continued to grow well in the first half. We have a very, there's a truly global footprint in this business. We make sales in over 100 countries and we have operations. We have boots on the ground in 32 of them. We're benefiting from the broad product portfolio. So yeast, we anchor on yeast and then we carry other bakery ingredients, often into very fragmented customer base. That's working well. We have a strong brand. So we've got the Fleischmann's brand in the US, which ACH takes to market everywhere else. Maori does it themselves, so Brazil, etc., countries like that, and sales in retail are getting better and better. It's a strong part of the business. Non-yeast bakery ingredients. You may remember that we invested quite a lot of money in a new technology center in Holland, and we've also been investing in regional baking hubs. There's a lot of change, a lot of need for change across the bakery sector. So new words, new ways of preserving product, clean label technologies, etc. And we're very good at all that. And then finally, we also have a part of the Maori business, which is yeast that is not going to bakers. We have a lovely alcohol business. The ethanol yeast is is strong. We bought actually that's a picture on the next slide. The omega yeast plant on the right hand side to get us into brewers yeast. That business only supplies the parts of the United States, but the technology can travel. So we will make it travel globally. bioethanol I've mentioned, craft beer I've mentioned and then the last pit is animal nutrition where of course we have good understanding of the feeding regime for all sorts of animals. Yeast is an interesting product there and we are developing or we've already got a range of products. We will have more. Back in November, I shared this framework with you to show how we think about the specialty ingredients of the non-Mowry part of the ingredients portfolio. In this half, and I don't want to spend too much time, although I'll have a quick look at AB enzymes. We made good progress across most parts of this portfolio. And my link to enzymes, we had a particularly good first half in the enzyme business. It's a great example, our enzyme business, of where multi-year investment in both capacity, but more importantly, innovation and capability particularly sales capability, is delivering results, delivering them right now. We've also been investing in new regional bake labs, which enable us to localize the application of enzyme products within markets. The commercial team has grown significantly, and you can see in this chart that we're getting good growth. two investments we've recently completed in specialty ingredients. The first one is a new spray dryer in our site in Hamburg which is coming on online right now. Spray dryers don't sound very exciting but it's been a bottleneck for this business for some while and now It's not. The second bottleneck has been fermentation capacity in Hamburg. That will be fixed by year end. That really gives us about double our capacity in the yeast extracts business. So really quite significant. opportunities that will come about through those bits of demodellnecking. And then in SPI Pharma, this is a business that specializes in both pharmaceutical excipients, so these are things that basically carry pharmaceutical actives, and then some fairly straightforward actives, particularly for digestive health. So if you've been buying Maalox in the States forever. That's our active ingredient. Anyway, we've been investing in new capabilities for our French site, which is down in the south of France. We're also already players in the animal vaccine adjuvant market. So things that carry vaccines into animals. And with the investments we've made, we can enter the human vaccine adjuvant market and we will do that. On to sugar. Let me have a drink before I launch myself into the defense of our sugar business. Back in November, we guided our sugar segments to an operating profit of 50 to 75 million pounds this year, down from close on 200 the year before. But in the first half, we delivered an operating loss of 16 million. And we expect the full year loss to be closer to 40 than the 50 to 75 profit that we guided. What has changed? The answer really is two things, maybe two and a half. The first one, by far and away, the largest contribution to the decline in profitability has been Vivergo, the ethanol plant. I've got some more to say about that later. And then secondly, and it comes with sort of. This is a humble apology, probably. We've lowered our outlook for our European sugar businesses because the prices that we thought we were going to get ended up being significantly lower than we'd anticipated in November. In November, the negotiating round hadn't ended. So we were kind of forecasting where we thought prices would be, and they went lower. You can see on this chart where we – where it – ended up and of course we had these high beat costs that we negotiated at a time when we thought that the very high European prices would maintain and I said in November that two factors would drive up the profitability of sugar in 2026. One was lower beet prices. And we have, I think in the UK in particular, we've delivered on that. We've already contracted beet for the next campaign, so starting in September. which will have a £50 million benefit in 2026. The second thing I said would happen was a rebalancing of supply and demand across Europe. And that, I'm afraid, will take longer than we'd anticipated. Acreage has been reduced, but not by as much as we hoped. We took our acreage down by about 10%. We thought everyone else across Europe would do something similar. It's turned out to be more like 5%. That's unhelpful. And there are still, then just to kind of add insult to injury, I suppose it's a good thing if you're a farmer, but the sowing conditions across Northern Europe, which is where most of your beet is sourced from, have been really, really good. So the crop got into the ground early, it's got away really well, and I think there's a potential that yields would be higher next year than they were last year. So more supply. taken together, we would anticipate that the recovery of European sugar prices will take longer than we were thinking back in November. You can see that chart. They have turned. We would have thought they would have gone further than they have. So that particularly applies to the UK, although it's also true in Spain. But in Spain, this deterioration in prices, if you like, has... lower the water levels, and expose some of the rocks in that business. That business has a cost base that's structurally too high. There are four factories processing not a huge amount. Two of those factories really process quite small amounts. And we've got to address that. It was masked, as I say, by high sugar prices for some while. We're close to completing an operational review, and that review is assessing a number of scenarios to restructure the business. We'll have more to say in the next month or so. We have to be very sure that we follow the proper processes and communication expectations in that Spanish market so I can't say more at the moment but I will be able to say more I hope reasonably soon The Virgo, quite frankly, has sort of done my head in. We have a plant that works very well and is in a very good place on the cost curve for European ethanol producers. Ethanol demand in Europe is increasing. There's no capacity going in, no new capacity going into Europe, and the market is structurally deficit. That plant should be making good returns. It's not. And the reason for that... is low bioethanol prices below what we can afford to sell profitably. And those low prices are consequent on the way that the current legislation, regulations, are being applied to bioethanol by different branches of government. And it's essentially undermining the commercial viability of our business. Now, after a protracted start and... It's amazing how opaque government interpretation of regulation has turned out to be. It took us a while to get the bottom of it. And then it took us a while to find a government department that was interested because they all owned a little bit of it. of ethanol. Everyone wanted the industry to survive and thrive. It's a lovely part, a big investment in the green economy in a part of the world where the green economy is central. But everyone was sort of going, well, not me, Gov. Until we got into Downing Street and then things have changed very rapidly and we've got good engagement. We hope these discussions will be successful. Essentially, we are part of a team from across government that is exploring regulatory options to improve the position right now. And the current problem is what we call a double, remind me of the phrase, double regulatory credits, renewable credits for ethanol that comes from waste. And too much has been defined as waste from both within Europe and also within the Americas. The government, we think, can stop that. The government also has to take a second step, though, which is to keep an eye out for the interests of the ethanol business in the future when they think about changes to tariff structures. So we don't want them simply to stop this one because another one will pop up if we're not careful. We want them to stop this one and then put in a review mechanism that basically says, when you think, oh, Mr. Customs officials, about allowing access, privileged access for ethanol, you need to look at the interests of the UK ethanol industry. So we don't need new regulation. We just need different interpretation of the existing legislation. And we don't need government money. which at that point all civil servants go, oh, thank goodness for that. But it's not certain, and it's got to happen quickly, because we're bleeding cash quite rapidly. So it's no good for them saying, well, there'll be a review that will be completed by March next year. No, it's got to be now, next couple of months. And as I say, we won't tolerate these level of losses. There's absolutely no point. If there's no effective regulatory competition, this business is dead. So we may as well recognize that. Right. Moving to Africa. We remain really encouraged by the prospects in Africa, the growth opportunities in particular. The major initiative is the building of the new mill in Tanzania. Now, building a world class site in the middle of the countryside in Tanzania is not straightforward. And the construction schedule has slipped a bit by about six months, which we think in the grand scheme of things is OK. But it's given the country the need to import sugar to fill the gap that we will kind of remove once this factory is up and running. And they've inevitably they've imported a bit more sugar than they needed. And the prices have fallen and it's all it's all not being great commercially. We are beginning to commission the plant now. And we think that by July, we'll be producing sugar from it. And certainly by Christmas, Tanzania will no longer need to import sugar. So the whole kind of control of the market will be, the discipline of the market will be much greater. We have a fabulous brand, which would be growing if we had the capacity. We will have the capacity. We will have a fabulous cost base. And it will be great. But right now, this is my half. of a problem. The Tanzanian market is not making the profit that we'd anticipated because we'd anticipated the factory was going to be open earlier. But so elsewhere in Africa, continuous improvement in the factories and in agriculture, there's a big opportunity in agriculture, which we are unlocking. And I'll come back to some of the how we're doing that in a moment. But let me start with just some comments about our factory in Iswatini, what was Swaziland. So that factory is nearly full. There is improvements in irrigation, which I think the World Bank paid for. And there's more sugarcane available in the next little while. There's clearly a market for the sugar we can produce. But we need to demottleneck the plant. De-bottlenecks tend to be a whole lot cheaper than greenfield sites. And this one will allow us to increase our throughput by 20 percent. It'll be a very profitable project. We'll be selling an extra 38,000 tons of sugar each year without significant increases in fixed costs. And then secondly, back to agriculture. This is just an anecdotal example of the sophistication, I think, of the agriculture in our own estates. But we're now flying drones over our cane fields. which take pictures and then analyze those pictures using AI programs, which identify problems in those fields. So is there a patch somewhere where the irrigation isn't working properly? Is there a patch where there's some disease? It allows us to get on to fix those issues. really really quickly and to improve the yields as a consequence. I think there's a significant yield opportunity through deployment of this sort of know-how and through other things as well. Okay, so bringing sugar together, I'm very clear on the actions that will deliver the operational regulatory solutions for both Azucarera and Vivergo, and will drive improved financial performance in those businesses, or in the case of Vivergo, lead to its closure. There will be a rebalancing of supply and demand in the European sugar market. It's just taking a bit longer. And with that rebalancing, sugar prices will increase. But even without that, the cost reductions coming about from low beat prices will set us well on the way to a nicely profitable British sugar. And then Africa, lots of opportunity, lots of bumps in the road, lots of excitement, but a hell of a business. And so although I'm disappointed with the results for this year, I really am. I'm confident that the sugar part of ABF will recover its profitability. I've said over the medium term, I hope that next year will be a lot better and the year after we'll continue to see the improvement. Finally, for completeness, because it's not the biggest part of the sector, let me just touch on the agriculture business where we've been trying to pivot to value added products and services and have been making a fairly good fist of it. We've also invested in providing a full service offer to the dairy sector in this UK. And that's actually going quite well. There have been a couple of one offs in the year. We've written off one project, which if it was in a bigger part of the business, part of ABF, we wouldn't really have noticed. But in the context of. baby Agri was a bigger deal. So Agri, absolutely fine. Look, before I finish, I just want you to highlight a couple of points on our capital investment. I wanted this to be a build, but anyway. So we've already completed the half one of 2025. There's a lot of capex going on, particularly in food. And I just wanted to give you some update on where we are with some of these projects. So we've already completed in the first half of 2025 that tip-top capacity expansion around Buns and Rolls. Scrocchi Arella, which I'm sure you're all as excited by as I am, that plant is up and running up in Bradford. The spraying drying capacity is well through its commissioning at the moment. And then that vaccine adjuvant capability in SPI Pharma. That's all kind of done. To complete it in the second half, the Ovaltine production in Nigeria, 7 million babies a year. There is a huge market for a product that supports the well-being and health of children. The brand resonates. We just don't have a cost base to make the most of that opportunity. We will do shortly. The fresh yeast plant in India is important. It shall be complete in the second half as well. The enzyme powder packing facility, the most expensive packing line in the history of the world as far as I'm concerned, but it's just about done. That sugar mill in Tanzania unlocks a huge amount of commercial growth there. And then there's a premix plant in China in the agri space, which again is following that strategy of adding value to agricultural production. There are then some projects which are coming along next year and in some cases the year after. Probably by Christmas we'll be commissioning the TipCop capacity expansion in Western Australia. We'll be the only scale bakery in Western Australia. Capacity expansion for Blue Dragon in Poland. It's the main bit of the supply chain for Blue Dragon globally. We're relocating my old flour mill which was in Melbourne and is now going to be in Ballarat. That's a 50 to 100 year investment in flour production in the fastest population growing part of Australia and that will be a good one. Fermentation capacity in Hamburg I've mentioned that will be done by Christmas. Decarbonisation projects in the UK, very profitable because you're saving expensive natural gas. The steam drying project at Wissington will be the UK's largest carbon reduction project, bar none. Outside, I think, sorry, but none apart from wind farms, offshore wind farms. It's a very, very big project. And it's using technology that's well understood and has already been used by other European sugar factories. So that one. Deboff Neck and East Martini, I mentioned. Lots of improvements to irrigation and yield in Africa. And then we're slowly cracking on with some of the ERP investments. They're always slow, disruptive investments. and there are a lot of them on, and there will be for a couple of years yet. I couldn't, because I went and visited it just a few weeks ago, I thought I'd share this picture of the animal feed plant in Western Australia, which we completed a year ago. Profits have doubled. It's operating it's producing profits significantly above its build case it's the only talking about moats you've got the Indian Ocean on one side and the desert on the other it's by far and away the least cost and largest feed mill in Western Australia it's again it feels more like a high quality bond as an investment. There won't be a huge amount of growth from it over the years, but it is rock solid and I love it. Group outlook. So the financial year guidance is unchanged with the exception of sugar, where we've given you the updated guidance. This unchanging guidance includes the absorption of the U.S. tariff impact in the second half of the year. We've done a lot of work across the group. We really do know where we are. We are with tariffs in all parts of the business. We just don't know where the tariffs are going. And we've got less of a clue of what the consumer response to moving, changing prices in the U.S. might be. We've got three areas of focus in the group where we're taking clear action to improve the profitability. Spanish sugar business will know where we are reasonably soon, as we will with UK bioethanol and also in our UK bread business. And all these plans, there's lots of work underway. The balance sheet, of course, is strong. There's lots of investment, but I hope disciplined investment going on across the group. And I firmly believe we remain well positioned to deliver long-term and sustainable growth, both across Primark and also across food. With that... I'll hand over to you. You've all got microphones. Please use them. We don't have a roving mic or anything else. And if you would direct those questions directly to Joanna and me rather than Owen, I'm afraid, who's only here as a retailer. We talked to you yesterday. We'll come back. Yes. Sorry.

Hi, good morning. William Woods from Bernstein. So three questions, if I may. The first one is just on the strategic reviews. Obviously, announced kind of three strategic reviews, two of which I think we've heard about in the past, Vivergo and Allied Bakeries. It feels quite reactive rather than proactive. Why have you decided to do them now? Why not before? And I suppose, why not do more and take a more proactive stance in some of those more challenging segments?

Did you have three questions? Or was it a question about three? No, I think that's very fair. I think in bakery, we saw the improvement last year. We went, oh, good. A lot of what we've been doing is working, and then it stopped working. And you sort of go emotionally, look, enough. So, and before that, you know, the two really bad years were sort of post-Ukraine, gas prices went up, wheat prices went up. It's dangerous to draw kind of long-term conclusions from what you know is a short-term situation. Before that, we actually had quite a good time through the COVID years. So, but no, having seen Tesco's take a bunch of trade offers, you just go, I'm I'm done as is. The Virgo, a lot of the battle has been about getting the plant to work properly. The early battles after we first built it, and it's been there since 2012, we couldn't really get it going properly so we mothballed it. the RTFO legislation to get applied to the UK. It was applied. UK was a deficit market. We had the fixes for a lot of the problems. We'd spent some of that time while we were mothballed looking around other similar plants and went, aha, okay, we know how to run this thing. And so we then reopened it. Inevitably, it took a little while to come back up. These big plants do. But we got to a position where it's been running really well. Really, really well. And then we're going to start this year with ethanol prices we just don't understand. We can't see what UK customs has been granting others. Because they don't tell you. So I'm afraid it took a little while to actually get to the bottom of it. It then took a little while to go, well, the only way to fix this is for governments to change their mind about how they administer that sector. And that's what we've done. Azucarera, I think in some ways... Maybe we missed the improved cost position of their competitors across Europe. And we shouldn't have done that. And we missed it, not least because with higher sugar prices, everything was tickety-boo. And then, as I say, the waters recede and you realize that actually, no, these plants, which might not have been too small in the old days, now are. So I think each one is kind of specific. But if your question is, have we been asleep at the wheel? I don't think we have.

And it takes time. It takes time to do these things and to be ready to talk about them. So we are ready to talk about them. We're doing them.

Understood. Thanks. Oh, sorry. Can I just go one more, if that's all right? Just on private market in the UK, obviously, the light of light spits off to market share coming down. Are you worried that anything more structural is going on in the UK in terms of product, price, consumer, offer? Are you worried that?

No. I'm really not. I think the business is fantastically well placed. I think some of our larger competitors are doing a better job than they've done for a while. But hey, we live in a competitive world. We are very differentiated. But we've always got to earn our trade. I really do welcome the review of the de minimis legislation in the UK, not because we can't compete with it. I wanted to show you that market share slide because that's taken us through all the online stuff and all the Sheehan stuff. And we're still, yeah, it's come down a little bit year on year, but it's still in good shape and the margin is still there. And there's, I think, a raft of cost opportunities that give us oxygen to do whatever we want to do, whether it's more digital, whether it's investment in price, whatever it is, we're going to have oxygen. Maybe the exchange rates help in that way. So, no, I think we're in robust good health. Yeah, sorry.

Thanks, George. Richard Chamberlain, RBC. Three from me, please. I wondered if you could comment on the Primark margin outlook as best as you can for next year? Obviously, we've seen a weaker US dollar recently, lower shipping costs. Is that now looking more favorable? And then linked to that, are you guys looking to introduce sort of more flexibility into the Primark supply chain, particularly on the US side, or can you? I don't know when you need to ship or make those decisions about back to school and fall collections and so on, but is there anything you can do there to introduce more flexibility in view of the tariff situation. And then back to Vivergo. If you don't get a favorable regulatory outcome and you are forced to or you decide to mothball some or all of it, what would be the sort of cost of doing that? Would that be a material sort of one-off cost or cash cost? Thanks.

Do you want to take the margin outlook?

Sure. if you get it wrong we'll put you right i'm sure you won't that's confidence for you um right so in terms of margin outlook i think fx definitely we've seen an improvement but as you know we've changed slightly the way that we're approaching fx we're about two-thirds covered for next year um so we've taken some advantage of the better fx there's a little bit of tailwind um If we weren't completely hedged, that would be higher. As George said, we're comfortable with the level of margin, having come back to the historical levels. And the tailwinds give us fuel. Whether we invest that in additional margin or whether we put that into pricing, it's still to be confirmed. But at the moment, we're comfortable with that. And you're right. There are some tailwinds in some areas.

Tariffs? Look, there's short term and there's long term. Short term, you want to delay what you're putting through the U.S. ports for as long as you can. It wouldn't surprise me at all if we found some stock shortages in the U.S. retail world. There's an interesting one that now I believe that most toys for Christmas are shipped round about now. And they're all coming from China. So I think ports around the world, everyone's doing what we're doing, which is saying, well, we'll trickle in what we have to trickle in. And we'll hold back as much as we can until we know. And we might just be waiting 90 days. So worth giving a go. In the long run, there are parts of what we buy from China which I think can move. And ready-made clothes, I think there are viable alternative sources. Bangladesh is quite full, but India is putting on capacity reasonably quickly. It's everything else that's so difficult. So our footwear has all come from China. Our cosmetics are coming from China. A lot of our home has come from China. There is no alternative source for that. But I look at those categories, and I look at what Walmart and Target and Amazon sell in the States, and I sort of think, I cannot believe that the current administration want the prices for all those sorts of products, which there's no way they have an interest in making them in the U.S., will remain at these kind of 145% tariff levels. But, you know, never underestimate WIM or whatever it is. But I would look at those and go, well, I think that those tariffs are going to come down on those. But I don't know. All you can do is remain kind of aware of where you are at any one stage and we're good on knowing what everything means to everyone. And then adapt as best you can. But let's be clear. If tariffs on those kind of categories that can't move remain at 145%, American shoppers are going to see 50%, 60% price rises for their toaster as the midterms approach. Anyway. And then... Shall I take Vivergo? Yeah, you take Vivergo.

As you know, Vivego is fully written off. We've taken an impairment last year, so there are no material costs.

The actual closure costs would probably be 15 million or so, and keeping it mothballed would be a couple of million a year. Thank you. Sorry, Warren, I'd rather shut you up and perhaps it's...

Yeah. Yeah. Can you give us maybe a little bit more color, what the ranges might be to have a think about it? Yeah, sure. And, and, and perhaps, you know, you're able to maybe not sort of specify, you know, how big the Spanish losses of the logo.

Yeah. Might be for the full year, so we can kind of assess if you do get solutions. Yeah, yeah, yeah, yeah. Okay.

Do you want to take those?

Yes, sure. I think we talked about that more on yesterday. What we're seeing is a bit of a shift, isn't it? I mean, we've gone from a 50-75 profit this year to a potentially up to 40 million loss. So we're shifting that. let's call it around 100. So we're later in that recovery curve than we would have expected, which obviously will have an impact in FY26 as well. So that's how I would think of that. We're just a little bit behind that curve. In terms of losses, George, you mentioned the losses of Vivergo, about 3 million a month. So yes, the quicker we get a solution, the quicker we can... get back to a profitable position.

In some ways, one of the things that we've got to consider with Virgo is that we know that you can get rid of $3 million a month just by shutting it. If we don't shut it because we've got the regulatory control that we need, then I suspect it will take a bit of time to get the cheap ethanol out of the system and perhaps the losses will actually carry on for longer. And that's a discussion we have to have with the government about timing. And then Spain, I would imagine next year, we've got through a lot of the restructuring costs, if that's where we go. Sorry, I really shouldn't say anything more about Spain. And just a second one, a bit more philosophical question. You talked a lot about context plans and how you're almost accelerating the context in the non-prime market. Yes. Lots of different things that you're doing.

Yeah. Yeah. Yeah.

At the first level it is, you would look at Africa and go actually the IRR needs to be higher because the risk is higher. But across the rest of the portfolio we would say no, let's look at what the Payback is, are we going to make, sorry, is the proposal, does the proposal carry a financial return, which in the first place is higher than the cost of capital? That's the first thing. And then secondly, does it have enough extra so that stuff can go wrong and you'll still make your cost of capital? But that's just the first level. You then look at, do you believe it? And do you have confidence in the team? What's the track record in the past? What's the volatility of the business? There's been no point putting CapEx into Allied Bakeries recently because you're not going to fix the loss. So let's not put good money after bad, even if the incremental return on that particular project looks quite attractive. Now, in sugar, essentially the CapEx is going into two places. It's going into very profitable renewable projects in the U.K., And I firmly believe that that UK business is – I mean, we've made over 300 million quid in five years. We'll lose 20-odd this year, and then it'll come back again. So I think that's a place that's well worthwhile investing in, particularly when there's that certainty around you're just reducing gas and you're getting a payback in five years. So that's one area. And then the second one is growth projects in Africa. where, yeah, it's a wilder ride. But there is, you know, we are so well placed and the market is growing and the population is growing. And I think, you know, we've taken a decision that we want to invest Africa, not endlessly, probably not more than the cash we generate in Africa. But we do like these projects. That Iswatini one is lovely, as is a... a co-generation project where we have a 20-year contract to supply energy quite profitably to the Swazi grid, East Swatini grid. Those projects, once you've got your head around Africa risk, they become no-brainers. Sorry, yeah, Trina.

One follow-up and a couple of other questions, please. Just all on Primark. Primark, in terms of like-for-likes beyond weather and comms, do you believe they can grow sustainably positive like-for-likes with space coming in at 4 or 5 percent, or does that need to step back to allow Primark like-for-likes to turn positive? And just to build on that a little bit further, you've talked about current trading being more encouraging. You've talked about UK specifically. Has it turned positive just in the UK, or are you saying Primark is positive, like for likes, in the more recent trading periods? And last one, I think, Joanna, you talked about tailwinds for Primark margins into next year, where you are assuming some tariff impact in the second half of this year, if that continues into first half next year, for example, or on a full year basis. Should we still be thinking stable margins Primark for next year? Is that a reasonable basis for forecasting?

Do you want to do that last one first?

Yes. We have done quite a lot of granular work to understand the impact of tariffs, but as we know, that's given what we know today. So I think we'll need to look into next year what that means. What we've been trying to do this year is mitigate it. We will see what happens into next year, but we will see what happens into next year with probably a different framework, as George already said. The tailwinds persist on other areas, though, so that will again allow us to have some fuel potentially.

Just an example of how hopeless shifting tariffs make any capital. We need a bit more teabagging capacity. Normally, we would have put it into the factory in Poland. But at 20% tariffs, supplying the US market out of Poland is not a great idea. If UK is at 10%, you'd put them into the UK factory. But Poland was 20, now it's 10. If UK and Poland go up to 20, then you would reopen the Greensville factory in North Carolina and put them in there. But we don't know. So all you can sort of go is to say to the supplier, would you just box it up and just leave them there? in your factory for a while. So that's my just a little bit of kind of head scratching anecdote for what this is doing to investment. Like for likes, where we've had the weather, we've had positive like for likes. Southern Europe has been really bad I don't think yesterday in Spain and Iberia was a great day either. So it feels very weather-related at the moment. Taken as a whole, no, we're not positive like-for-like over the last few weeks. But given that the big problem and the worry was UK, to see that in positive territory is very reassuring. and to see the sort of products we would hope would be selling, the spring-summer ranges selling and selling very well, really reassuring. We happily take on negative like-for-likes in growth markets. The second store in Milan cannibalized the first, but gee, we're richer for having two rather than one. we've always said that. The other thing that's more recent phenomenon in some of these new markets is we get a real surge around store opening for a couple of months. And when you're lapping that a year later with more normal representative trading, you get negative light flights. So Italy and parts of Eastern Europe, we've seen some of that. It's just the consequence of building the network, which is of stores, which we will continue to do. So there's always been a part of our argument about like for like, which is, you know, whatever, when it's being driven by that, where it's being driven on a genuine like for like basis. No, we obsess about it. Yeah, sorry. Warwick? Warwick.

Thank you. Morning. Warwick O'Kinds, BNP Paribas, Exxon. Two questions on Primark, please. The first is, could you just give us a flavour of the discussions you're having at factory gate, particularly in China, and what sort of factory gate prices perhaps you're seeing? And then the second is, you talked about some one-off costs in Primark and the phasing between H1 and H2. Maybe you could just remind me of those, please.

Okay, I happen to know that one, so although it's a financing question, let me impress you with my knowledge. We received a settlement from a class action lawsuit with the credit card companies. We got that last year or got that this year?

First half.

First half. It was quite a lot. It was 20 million or so. Factory gates a bit early. And it's a bit much. I mean, if it's 10%, you can go to the supplier and go, let's share this. When it's 145%, the discussion is a bit different. Clearly, I think suppliers in China are going to be more attracted to European or non-US customers. And I think I would hypothesize, and I don't know more than hypothesize, that... there may be opportunities amongst the Chinese supply base. Not least because some of this Xi and Timu stuff going into the United States, I think, is going to be throttled right back. It feels like there should be an opportunity there, but too early to do more than sort of share maybes and what-ifs.

Yes, got it. Sorry.

Hi, Grace Smalley from Morgan Stanley. First of all, on that point, I think one of the concerns has been indirect impact from the tariffs may be that inventory starts to get diverted to Europe and increased kind of deflationary competition in Europe. Could you just discuss how you're assessing that risk? And then secondly, I think you mentioned, I think it was when you were discussing grocery, that you were seeing weakness with the Hispanic consumer in the U.S., Could you just comment on whether you're seeing that also have any impact on the Primark business as well? Thank you.

Yeah, good questions. This diversion into Europe is new. We're not seeing consequences of it yet, but we're looking out for it. We're aware of the possibility. I think some product is coming to Europe just for storage here for the time being. It's to shorten up the supply chain. So if the tariffs do come down in the States, you have less. But we will watch out carefully for us. Around the de minimis review in the UK, we've certainly alerted the government to the possibility that that product may be coming in here and may be dumped. And that would obviously be a bad thing.

The second question was... I've seen the consumer in the US in grocery, and that will go into Primark as well.

Oops. Yeah, we've seen a little bit of softness in Primark. But... It's only three stores, but where there's been cross-border trade, you know, the Buffalo store ain't seeing a lot of Canadians right now. The McCallum store isn't seeing nearly as many Mexicans as it was when we first opened it. And the store in Sawgrass in Florida is seeing many fewer people from South America generally than it would. So it is having effect, both in people... kind of holding back, but also in specific bits of trade, which were quite attractive businesses for us. Temporary, I hope.

Yeah, sorry.

Hi, guys. Ashton Olds here from Redburn. Two clarification questions first. Just on sugar, just so I understand the moving parts, it feels like there's about a £100 million operating profit swing. Could you just maybe break out which parts are sort of Virgo or European sugar? I sort of caught £3 million a month for... but didn't quite catch that. And then the second part, Joanna, you mentioned just on working capital that there might be some swings related to tariffs. I was just wondering if that is due to the uncertainty you don't know yet, or is there any specific action which you're doing at the moment which provides that insight? And then I guess thirdly, just on Primark in the US, I guess it's very early days, but How are you thinking about potential store roles? Does it change your decision-making, at least for now? Any insight as to how you're approaching it at the moment? That'd be great. Thank you. Do you want to take the first two?

Yeah. Profit swing of about 100 million. That's probably there or thereabouts. As George said, the biggest by far component is Vivergo. And then it's the European businesses with the lower sugar prices. There is a little bit of impact from Tanzania as well. with the six months or so delay in the commissioning of that plant. But yes, the biggest one is Vivergo by far in terms of our expectations.

We budgeted to make a profit and we're losing $3 million a month. So it's quite a big swing.

It's a big swing, yeah. The working capital actions, we will do what's sensible to do. And if that means putting more stock, in some of our businesses because that will mean that we'll avoid some tariffs, that's what we will do. It doesn't mean that we have made final decisions on that, it's just that there is a potential upward pressure there for the right reasons. The last one was the Prime at US roadmap.

Yeah, no change. If anything, we think that the brand is more relevant than it was before the current environment found its way into all our lives. We have been delighted with our success so far in Texas. We think we have a strong Hispanic franchise We think the operating costs and freedoms in the south of the States are much easier than the northeast. So, no, we think this business absolutely belongs. And the stores that we're opening, we're opening profitably. So let's keep opening them.

Yeah. Thank you. It's Vandita Sood from Citi. So just two questions that would help model the underlying grocery business. Firstly, are you able to pull out how much allied bakeries is in terms of sales and losses? And secondly, I was under the impression that marketing costs are slightly 1H weighted. So is there a tailwind from that lower marketing in the second half? But I think, George, you also mentioned you might invest in pricing a bit in the second half. So just help us to model that. And then one on Primark, quick one, is if you're actually able to share what percentage of Primark is now not clothing, because I know there have been quite a few initiatives and I think you opened your first home store.

Okay, so Allied Bakery's losses are hovering around $30 million. Cash loss is rather less, but it's still cash negative. Elsewhere in grocery... Marketing costs being front-end loaded...

I think there has been years where it has been the case. I don't think this year is necessarily one where you'll look for that to change the phasing significantly. We're confirming the outlook. As we expected, the US oil's a little bit softer. And as George said, that probably, that softness will show in the second half. But then we've got upside in other of our grocery businesses. Yeah.

And it's in that US oils business that we're talking about reinvesting in price.

Yeah, yeah.

Not elsewhere across the grid.

And rather than marketing as well. Yeah, yeah. Primark, how much is not clothing and what are we doing in there? Yes, we have opened the first home store, which is fantastic.

Sorry, I should know this number, but I don't. I reckon it's a quarter of it.

we'll get back to you if i'm out by enough to make a huge difference to your model and i think it is what what what does that mean clothing but we will get back to you on that sorry clive yeah thank you uh good morning um i was actually going to ask you about how belfast's home store was doing and whether it was actually seriously changing your view to that non-clothing category but more importantly um Taking the three problem children in the business at the moment, should we expect more impairments? What does it cumulatively add up to on an annual basis, the headwind of that? You may not want to answer this question, but I'd be interested to know what the cumulative losses and write-downs and provisions of Allied Bakeries have been. And in that respect, are we looking at a reasonably fundamental change in the attitude of ABF today to those problem children? Thank you.

The Belfast store is doing fine. It's funny, the sales bounce has been quite volatile, but it's earning its keep.

Should I talk about impairment? I think that was your first one. We have taken a big impairment in Azucarera, as you know, and that leaves us pretty much where we should be. We've got our auditors in the room as well. And I will confirm that we shouldn't expect from what we're doing any further write-offs of assets. I think bakeries, as we know, we have a fair valuation for that business. So there is value in the land, the buildings, et cetera. So no, we wouldn't expect any further losses that come from write-offs.

And the Virgo is fully written off?

Yes.

So, no. And I don't have that number of accumulated losses for bakeries. In total, the EBIT benefit of just getting to break-even of those would be 100 million. It's a big number.

Yeah.

Yeah, sorry. Hi, it's from . Just one question on, you mentioned that everyone seems to be delaying shipments into the U.S. because of tariffs and how they may change and they may be able to get a better date if they delay the shipments. Do you worry about there being log jams later in the year in the U.S. ports? And would it rather not make sense in some cases to actually have shipment going through now, at least trickling through now, than accumulating together?

Well, look, we have to trickle through what we, you know, we've got to keep the shelves filled. But we don't necessarily need to get the depot filled. Yes, I mean, we saw these appalling log jams post-COVID. And I'm not sure that American ports are the most flexible things that exist. So do I think this is possible for empty shelves across American retail? Yeah, I do.

Okay. Okay. I don't know if there's any questions online.

To ask a question, please press star 1 1 on your telephone. That's star 1 1 to ask questions on the telephone. We will now take the first question from the line of Georgina Johanan from JP Morgan. Please go ahead.

Oh, hi. Thanks for taking my question. I've got two, please. The first one was just in terms of the Primark stock that's already in the US for the second half. Am I right in understanding that sort of the vast majority, like maybe two-thirds plus of your stock for H225 is already in the US, please? And then the second question was, I'm just thinking about the 2026 tariff outlook, and I understand that you're saying it's You'll be able to mitigate it, not necessarily material at a group level. But just to help us understand a little bit, stepping back, when we think about your cog space in the U.S., should we be applying that 145% to the China proportion of that kind of U.S. cog space that we can see from a modeling perspective? Or is there an element in that U.S. cog number that that is, I don't know, perhaps some sort of central cost or design cost or something to which we don't need to apply the tariffs because otherwise it's really difficult to see how it's not, you know, a double-digit impact on the overall Primark EBIT. So I'm just trying to understand what we're missing in that calculation, please. Thank you very much.

Georgina, let me just... 145% unmitigated tariffs would lead us to have to increase prices by a whole lot more than double digits. I mean, I think you're talking sort of 40 to 50%. And yeah, there is some... fixed costs, but that 145% just does for, say, half of what we're selling in the UK, just flows through into a very, very big number indeed. Primark stock, we've usually got a couple of months stock in the depot. We'll obviously kind of run it down as far as... I don't know how to make it not do that. So, yeah, there's adequate stock in the system to take us through the bulk of this 90-day review period, but not entirely. Yeah, Grace.

Sorry, it's Grace from Morgan Stanley. Just to follow up on George's question on that, were you able to pull forward any inventory ahead of April 2nd or no?

a little bit more in food, actually, than in Primark.

Yes, absolutely. Yes. Which is why we're signalling that it might be that there is a little bit of a build into working capital, because we will do it if we feel that that's the right decision. Online, I don't know if there's any more. There's no more questions.

Okay. Going once, going twice. Thank you very much indeed. Thank you all. And thank you for coming.

Thank you.