Associated British Foods plc

Good morning, thank you all for joining us either here in person particularly thank you or online. We're here to review the ABF standing results for the 52 weeks ending the 12th of September 2026 and I'm of course delighted to be joined by Joana Edwards our finance director here Chief Financial Officer, and Eoin Tonge, the Chief Executive, Primark. I am aware that this session in rehearsal went on for quite a long time, so settle down. We've got a fair amount to say, and I ask for your patience. Some of the content is, well, all the content is important, and I think interesting. Let me start by saying that this was a year of good strategic and operational progress across the group. I really mean that. The operating environment, though, was difficult. Weak consumer sentiment and a number of sometimes significant headwinds for our businesses. Those impacts were evident in the financial results that we've published today. Our adjusted operating profit was down 14%. Primarily due to low profit in Primark but profit was also low in our food businesses due to a couple of specific reasons and I'll come on to those. Adjusted earnings per share down 11% reflecting the benefit from share buybacks. We've maintained our full year dividend in line with last year. We completed £250 million of share buybacks 2026. This is a statement, the maintenance of the dividend of two things. Firstly, our confidence in the underlying strength of the group in the medium and the long term, both Primark and AB Foods, and also that even with maintaining the share, the dividend with lower earnings, the dividend remains well covered. This year our businesses responded well to difficult operating environment. We focused on things that were within our control and we made good progress with a number of important strategic projects across the group and there were a lot of them. There really were a lot of them. In Primark I am very pleased with the progress to re-energize our core proposition while opening up new avenues of growth, new important avenues for growth. This time last year we set out our key strategic priorities for Primark and we're delivering against these. We've taken significant steps to lower prices, to improve price perception, to strengthen our product offer particularly in women's wear and to increase customer engagement. In two areas where we said we would unapologetically focus first, we've delivered like for like sales growth. So both in the UK, which went from minus three to positive, and then in women's wear, our largest category where we delivered like for like growth everywhere. We're now building on this as we increase our focus on Europe and in other categories. Primark still has significant white space. And most notably in the year, our new franchise model, which has got off to a very strong start in the Middle East, even in the circumstances of that part of the world. The franchise model will open up markets beyond the Middle East and next within the Middle East. Saudi Arabia but then Mexico. Our decision to offer home delivery in Great Britain is also an attractive opportunity for future profitable growth. In foods we focused on what we can control. We had two very specific headwinds in US oils and sugar which masked good growth in a number of other areas in both grocery and ingredients. We stayed well invested in marketing and product innovation and I'll show you some of that as we go through. We made significant progress in key areas of self-help we identified in 2025 and in doing so we really have strengthened our business in a lot of different areas. We completed the acquisition of Hovis, major project both to acquire it and now the major integration exercise is well underway. We expect to deliver significant synergies to create a profitable UK bakeries business. There are no surprises. Thank you very much. and in agriculture we're exiting our UK compound feed business which will allow us to focus more intently on higher margin growth areas. This will both improve profitability within agri but also free up capital that has been quite miserable in the returns that's generated for us. Across the group we invested another 1.2 billion in capital projects. Majority of this will drive growth, new stores, depots, technology in Primark and new capacity, capabilities and technology in AB Foods. The large number of new products this completed either this year just gone or completing now will contribute meaningfully to future growth and deliver attractive returns and not in the distant future but quite close in now. We've made those investments while continuing to deliver strong capital returns to shareholders through both dividends and buybacks and this is underpinned by our still robust balance sheet with 1.1 times leverage. One of the most important, maybe the most important strategic decision this year was the one to de-merge Primark. We'll create two focused businesses, each with the capability, the investment capacity and the strategic flexibility to accelerate its own growth agenda. We're on track to complete that process in December 2027 and we've made good progress already to build the systems and processes to operate the business as a standalone business. We'll also use the time leading up to the demerger to provide a greater understanding of our businesses. We'll hold two separate capital markets days in autumn of 2027. We know that AB Foods, which is how we'll refer to the food business going forward, is currently less well understood and over the next 12 months we'll tell you much more about our portfolio of businesses and brands and how the food group operates. This will include a series of four shortish investor education events during 2027 and lovely to see as many of you as like to come at those. We'll start with a deep dive on AB Foods and how we operate, followed by events from each of the three business segments that we'll have within AB Foods, so grocery, ingredients and sugar and agribusiness. The main difference from the segments we have today is that we'll bring together sugar and agriculture. It won't change how these businesses are being managed internally, however for reporting purposes I think it makes sense to group together the commodity elements of AB Foods.

Good morning everyone. Let me take you through this year's results in more detail then. In 2026, group revenue was 19.6 billion, up 1% at actual rates, with a net benefit from foreign exchange translation of 284 million pounds. At constant currency, group revenue was 1% below last year. Primark sales grew 2% and sales in AB Foods declined 4% including disposed and closed businesses. Excluding disposed and closed businesses, AB Foods sales were down 1% as you can see from the slide. Group adjusted operating profit was 1.5 billion, a decrease of 14% at constant currency. While this was primarily due to lower profit in Primark, profit also declined in our food businesses. There was a small impact from foreign exchange translation, a net benefit of 20 million, and the group profit was in line of our expectations. Within the results there are a number of moving parts though, so let me go through the detailed performance by segment. Starting with Primark and looking here at sales, these grew 2% to 9.8 billion. New stores contributed 5% to sales growth and Primark like for like sales declined 2.6% in a challenging consumer environment across most of our markets. In the UK, we had a much improved performance. Like for like sales grew 0.5% compared with a 3% decline last year and we gained market share. This was despite the clothing retail market declining in the year. It is a consequence of the actions we've taken to re-energise Primark's proposition. In continental Europe, we are at an earlier stage in our commercial recovery and in the development of our capabilities in brand, marketing and digital. Sales were down 1% and like-for-like sales declined 4.7%. In the US, sales grew 13%. We made good progress with new space expansion with 14 store openings in the year. However, it was a difficult trading environment. This was mainly due to the effect of US tariffs on consumer sentiment and footfall. FY2026 was a strong year of openings with a total 37 new stores. This includes 33 of our own stores across Europe and the US and our first four franchise stores in the Middle East. Primark's adjusted operating profit margin was 10.2%. This was below last year for two main reasons. The first was our decision to significantly increase investment across price, product, marketing and digital initiatives to drive like-for-like sales growth. And in the areas where we prioritise investment this year, the UK and women's wear, our like-for-like sales grew. We also had continued investment in technology to build capacity and scale. The second was lower like-for-like sales of course and the associated increase in markdowns. There was a margin benefit from foreign exchange and the cost efficiency delivered across our supply chain, store operations and central costs enabled us to offset inflation. In grocery, in grocery sales grew 2% which primarily reflected the consolidation of Hovis. Excluding Hovis, our underlying sales were broadly flat. We had sales growth across a number of our international and regionally focused brands underpinned by continued investment in marketing and new product innovation. We had sales growth. Twining sales grew in the year. However, strong growth across most of the year was then held back by the extended summer heat waves in the UK and France, which lowered hot tea consumption. Grossly adjusted operating profit was down 11%. This was primarily due to lower sales and profit in our US oils business, as George just mentioned, both our retail brand Mazzola and our joint venture Stratus, reflecting ongoing pressure on consumer spending. Ovaltine profit was impacted by higher cocoa costs and the phasing of sales in Thailand as we changed to a new distribution model. The implementation of new ERP systems drove higher depreciation costs. At the half year, I noted that US tariffs had affected profit. A large proportion of these costs was refunded in the second half. Ingredients had an adjusted operating profit of £238 million, down 8%, in line with our expectations. In our yeast and bakery ingredients business, AB Maori, profit declined. This was mainly due to weaker consumer spending in the US, which reduced demand for our products. There was also subdued demand for our specialty yeast products for use in alcohol beverages. Most of AB Maori's other markets and categories performed well. In specialty ingredients, ABFI, the portfolio performed well overall. This included good growth across a number of our pharmaceutical products as well as in yeast extracts and enzymes for food and beverage markets. We continue to invest in R&D, commercial capabilities and strategic capital projects to drive growth. Sugar had an adjusted operating loss of £47 million. As we guided in April, we did not offset the first half loss in the second half. In the UK, sales and profit declined significantly. This was primarily due to lower average selling prices compared to 2025, which was only partially offset by lower beet prices. Profitability was also impacted by the recognition of onerous contracts provisions. This arose from low European sugar prices, higher gas costs and lower yield expectations for the beet crop that is currently being harvested due to the hot, dry summer. Lower yields reduced absorption on fixed costs as you probably would know. Our Spanish business as a Carrera had a reduced operating loss in 2026 as a result of our restructuring actions last year. In Africa, which is our growth market, overall profit was lower. This was primarily due to lower sales in South Africa and Eswatini and lower production in Tanzania. One thing to note is that the anticipated devaluation of the Malawian currency did not take place in 2026. We have factored currency devaluation into our 2027 figures. Agriculture adjusted operating profit was £19 million, broadly in line with last year. Our specialty business delivered good growth across specialty feed, feed additives and nutritional supplements. Lower profit from our joint venture frontier was due to lower commodity prices, smaller crop sizes and reduced demand for crop protection products following dry spring weather. We have taken the strategic decision to exit our low margin compound feed business in the UK to focus on higher margin growth opportunities. The results of this business are now included in disposed and closed operations and not within the agriculture segment. Moving to adjusted earnings and adjusted earnings per share. Adjusted EPS was 1.56 pence, down 10.8% reflecting lower profit, but benefiting from a lower tax rate and the share buybacks. Regarding the adjusted effective tax rate, which reduced slightly to 23.9%, These benefited from the reassessment of certain tax positions, which more than offset the negative impact from a change in the geographic profit mix. We do expect some upward pressure on the Group's effective tax rate in 2027 as we will be lapping the non-recurring benefit. Free cash flow of 652 million was in line with last year. While operating profit was lower, there was a cash flow benefit from having lower net working capital at year end. Mostly as a consequence of a reduction in inventories in Primark due to both phasing effect and specific actions to take the reduced inventory levels. Capital expenditure of 1.2 billion was broadly in line with last year and we also completed a number of acquisitions totaling 0.2 billion. I'll share more on these investments shortly. Our balance sheet remains strong and continues to support both investment and shareholder returns. As I just noted, our overall working capital position was lower than last year, primarily due to lower inventory levels in Primark. Seasonal inventories were also well managed. Our net cash position was slightly lower, reflecting the shareholder returns made in the year, both dividends and buybacks. The value of our pension surplus continued to grow and was 1.7 billion at the year end, whilst we continue to provide a cash benefit through the abatement of employer contributions. Turning now to cash and liquidity. Our year-end net debt position including lease liabilities was 2.8 billion compared to 2.6 billion in 2025. This reflects the net cash reduction I just explained and additional lease liabilities from properties acquired as part of the OVIS acquisition. Our leverage ratio was 1.1 times which is an increase on last year but well within our capital allocation policy. Total liquidity was 2.4 billion which includes undrawn committed facilities of 1.8 billion. This robust position underpins our continued investment in growth while maintaining resilience and flexibility. Our total investment in 2026 was 1.4 billion as I just said across the group split between 1.2 billion of capex and 0.2 billion of acquisitions. Around 40% of our investment was in Primark, across new stores, new depots including Sheffield, increased automation, digital capabilities and new technology. The remaining 60% was in AB Foods and a large amount of this spend was to complete multi-year projects. These investments will drive growth in new markets and add capacity where we've been constrained and also add new capabilities. We also completed acquisitions including Hovis in the UK, Abe's Bagels in Australia and New Zealand and Elementis Pharma in Germany. Across ABF we've invested more than 100 million this year in technology projects including automation to drive efficiency in our supply chains and new ERP systems to strengthen efficiency and decision making in our businesses. We expect group capex to remain at a similar level in 2027 as we make the final cash payments for projects that have now been completed in our food businesses. We expect capex in AB Foods to start to reduce in 2028. Our capital allocation approach is to return excess capital to shareholders, both through dividends and share buybacks. Our 2026 proposed total dividend is 63 pence, which is in line with last year. This reflects our confidence in the medium term and long term outlook for the group. Our dividend remains well covered. We completed our most recent share buyback programme of 250 million in August. Over the last four years, we have returned 1.9 billion to shareholders through share buybacks. and 1.6 billion through dividends. These shareholder returns alongside our continued investment in our business demonstrates our commitment to delivering long-term value for shareholders. I'll finish on our outlook for the Group. In a challenging year ahead, the Group will continue to make significant strategic and operational progress that will serve us well when the operating environment starts to improve. However, we remain cautious on consumer sentiment and the impact of inflation and higher energy costs on our businesses. We expect group adjusted operating profit and adjusted EPS to be below 2026 mainly due to sugar as previously guided. I won't go through the full detail of the guidance by segment on this slide. I would like to point out that in grocery dough we now expect adjusted operating profit to be broadly in line with 2026. While we expect sales growth in most brands and businesses, we expect this to be offset by higher input costs. Our grocery outlook includes a one-off impact from consolidating Hovey's losses in the first year of ownership as well. And we expect to deliver significant synergies and profit accretion in subsequent years. For the rest of our business segments, there is no change to the guidance we provided in our trading update in September. And with that, let me hand over to you, Eoin.

Thank you Joana and good morning everyone. So obviously Joana has actually just taken us through the performance of Primark in the year already. Just a quick recap to set the context. Overall growth of 2% driven by good expansion including the start of our franchise business in the Middle East. But like for like, a decline of 2.6%. However, with growth in the UK and a decline in Europe, tough overall context, it has to be said, across pretty much all of our markets, including the UK. And in that context, we're very pleased with the UK performance, which continues to consistently outperform the market. Clearly, performance in Europe was difficult. So we have more to do to win there. And I'm going to talk a good bit about that today. So 12 months ago when I was standing here I said we're going to challenge ourselves and have to take a really hard look at our operating environment and our business and be very precise about what we're going after. And I think the key point I want to leave here today is that we're very clear on our strategy and the direction. It's about building a better Primark. Driving like for like sales growth through clear levers of value, category focus, increased brand and marketing activation and in time more localization and improved customer availability. It's about leveraging our scale to drive an omnichannel model, which obviously I'm going to talk more about today, which is new, and also to drive expansion through our store estate and our new franchise arrangements where we believe we can accelerate. And it's all underpinned by cost discipline to enable us to invest in the proposition and to protect margin. I also ended the year with a new leadership team in place, some real world-class talent to help build a better Primark. We're on with this strategy, so let me set out what we've done in the year, what we're learning, where we are getting some wins already and how we are applying some of those wins. If I can wrap it up in a single sentence, we're going to create a stronger, simpler, more scalable business and you're going to see some of those themes as I talk through the review of last year So again, last year we talked a lot about refocusing and resetting our value proposition in the year. This is about getting Primark back to being who we are, the original and the best value disruptor in the market. It's about getting back to our fashion roots, investing in quality that our scale enables. But most importantly, and the biggest element of this has and will always be price. And that's where we've really focused this year. We started the year with Major Finds, which was a really successful promotional vehicle for our customers, showcasing our amazing value with just killer prices for the products that we offered. And it's been a great football driver. We started in the UK and we rolled that out to our markets in Europe through the year. but then we ended the year with iconic value and this really is the major initiative to reset our value proposition and indeed our price proposition we set this out in July as we brought in autumn winter product this is about a major price investment in iconic hero lines focusing where we believe it matters most we've seen a really good response across all markets and this has been in all markets Critically it has reinforced our category leadership in core categories such as leisure and nightwear and it's also come with an overall strengthening we believe and simplifying of the range including consolidating our price points. All of this reset now covers over a quarter of our range and it will continue through autumn winter of this year and spring summer into next year. The price leadership underpins a new investment in style and quality, including investments in fabric. Which leads me on to the work that we're doing on sharpening our product focus. Starting with women's wear, our most important and our largest category. I talked a lot about what we were doing in this category last year and it really has been a standout performer in the year. Not just strong like for like growth in the UK but beyond. For example, H2 women's clothing was up strongly in France and Spain. So what is the playbook? Well better product starts with better insights and we do have our most comprehensive and clearest ever women's wear customer insight across our markets. We understand who our core customers are and we have much stronger certainty about where we believe the growth lies. Primark is a fashion brand at heart and so we have reset our women's wear offer to attract more fashion and style-led customers. If you've been in store, make sure you do go into store, you'll see how different this looks and feels. We've strengthened our core women's wear fashion offer bringing more elevated contemporary style to the mat. all designed to challenge the perceptions of what affordable fashion can look and feel like. We launched The Scene, which is a new collection aimed at the growing youth market. We continued a strong fashion lens into our collaborations. We had the continued strength of our collaboration with Paola Echevarria, but we also had a new collaboration with Colleen Rumi by Colleen, which has been very strong in all markets, not just the UK and Ireland. Performancewear is another example of investment in value, quality, fabric and style. This is a deliberate category focus where we knew innovation and fabric and our scale could disrupt the category. It's been a really strong success story for us. We are now the largest seller of performancewear and athleisurewear in the UK in a relatively new category for us. To support these new strengths and lines, we have also introduced better in-store merchandising, displaying the complete looks for inspiration. Coordinated ranges have significantly increased year on year in store. And I mention this because we see good uplifts when we showcase the full outfits together for our customers. So critically we are also applying the same focus in women's wear to our other categories where we are in truth a little further behind and we had less strong performance in the financial year just gone. Kids wear has been a big focus for us in the year. We have a huge opportunity we believe in this category. and there is a lot of change underway. We've already improved the mix and quality, invested in price, simplified the range, improved style and in some cases tackled the over-reliance on licence. We have a higher kids wear mix in our European markets so strengthening in this category is critically important for those markets. We launched a lot of these changes just in autumn winter just now so more to report on this. And finally in menswear we're also rebuilding our style credentials in that category in a similar way to what we're doing in womenswear. Plans are at an earlier stage albeit you will see some of the changes in our autumn winter collections already. Underpinning our improved category focus is a continued step on in marketing and digital engagement across all our markets. We said this time last year we were at the foothills in this, but we have made very good headway in the year. We started and indeed invested most of our energy and money in the UK at the beginning of the year. It was there that we had our very first integrated marketing campaign. which has delivered strong commercial results so we started off with in denim we can in last September which had strong performance which we measured with a good uplift in the Primark market share in women's denim and then we had shockingly chic in spring which was actually the launch of that elevated fashion in the core fashion offering that I spoke about and then the getaway in summer Pleasingly and quite importantly brand metrics have improved in step with these campaigns. Of course the obvious question is what are we doing outside of the UK in relation to our marketing and activation and our focus is to increase our activation in European markets. I talked about major finds they started in the UK in the year and then we moved them all the way through to European markets in the year but in H2 we really started to step up our broader activation in Europe So we had our first funnel marketing campaign in Spain with the summer campaign that I mentioned, The Getaway. We've since continued in Spain with our Primark Form performance wear marketing campaign just at the start of this financial year which has been very positive. We launched also our first multi-channel marketing campaigns in France and Italy at the beginning of this year which were focused on autumn winter fashion. We've also started more meaningful local activation with what we call our spotlights, where we choose a partner influencer to help us curate a Primark edit to highlight and spotlight in stores and online. We started this in the UK with a fashion focused spotlight. We've since extended these to Spain with a kids wear focused spotlight and then in recent weeks a more again a fashion focused spotlight in Italy. All of these have been successful. I think there's lots of real potential for them. Very local, very focused in the market that we are operating in. So we've a lot of focus, more to do in activation in Europe, and we'll continue to step that up this year. Which, if I think of stand back and think about Europe, I think this step up in activation, along with our investment, our iconic value investment, our category focus, in particular kids wear, gives us confidence and recovery in the European markets. And in time, these markets should benefit from more from localised ranging. So there's a lot going on in Omnichannel to get excited about. Across our markets we continue to invest in digital engagement. Our CRM database that we are actively marketing to was up 38% year-on-year, growing both in the UK and Europe. We've continued to see very strong website traffic, particularly in the UK, which is up significantly in the year, obviously helped by Click and Collect. Our app is now live in the UK, Ireland, Italy and Iberia and overall stock tracker usage across web and app is still high across markets and we've seen higher stock checker usage on the app than the website when available. There's more opportunity here but we have seen some really good delivery and we had a full year of click and collect in the UK which has gone really well with continued strong metrics. The last step is to go fully omnichannel. As George mentioned, we announced our Sheffield site acquisition in September to support home delivery in the UK. This is obviously a big deal and one we're very excited about. I guess there are a number of key questions that are being asked on this. Why? Why now? Can it be profitable? And of course, when? And we've done a huge amount of work on this in the last number of years. Critically, it starts with confidence around the target consumer. It is targeted on customers who shop with us, but more occasionally, generally more style led and do a lot more of their total spend online with other brands. So the first point I want to make here is that this is set up to really focus on incrementality. And Click and Collect has given us some real confidence here. Sales through Click and Collect have been highly incremental to date and have supported the market share gains that we've had in the UK. Click and Collect through our work reaches roughly a 10km store catchment area, so home delivery clearly unlocks more. Aligned to this focus on incrementality is how we believe we can protect the basket size, obviously critical for delivering our value proposition profitably. With this type of customer, we feel we can have a minimum order sizes to protect the basket size. And basket sizes and click and collect have been good to date and also give us confidence here. And we're going to protect the economics further by passing on charges in line with the rest of the market. Importantly, having full home delivery strengthens the effectiveness of our digital engagement and the cost of customer acquisition both for this channel and for our stores. So after years of review, we feel very confident that it's time to now target a profitable growth in this channel. Our plan is to launch in the UK by the end of the calendar year next year. Store expansion continues to be a core growth engine. We delivered 33 new owned stores in last year across Europe, the US and UK. In total, new space delivered 5% growth. Overall, we still see a lot of runway for space growth in Europe. Our market penetration in some markets is still very low and with a better and more focused proposition that I've spoken about, we feel we have plenty to go after. In the US we substantially increased our store estate in the year with 14 new stores taking us to about 50 now. That included our Herald Square store in Manhattan which performed strongly and around which we drove a large brand awareness campaign which has really helped. As Joana mentioned, the year had a more challenging backdrop with tariff volatility and a nervous consumer. I was there a couple of weeks ago, it felt a bit more reassuring if felt conditions appeared to be settling. We are now trialling a lot of new things in the US. For example, we are testing more bespoke ranging for our stores there at the moment. Still loads of growth potential in the market. Also see an omnichannel opportunity in the US in time. But off the back of our recent rapid expansion, we plan now to focus on the performance of our current enlarged estate. This includes the testing the new customer proposition that I've mentioned before, including the more bespoke ranging and overall drive profitability and cost optimization. And then we'll look to restart our expansion from a stronger base. Our brand has so much untapped potential globally and franchising is a capital efficient and expedient route to market and to attractive new markets. In a year we have already built a meaningful business in the Middle East now with six stores across four countries and there's so much potential still in that region. I was in Dubai last week and the stores were performing remarkably well despite the near-term uncertainty. Next year we open our first store in Saudi Arabia that George mentioned with Al Shaya at the end of March and that opens with a lot of growth potential. We also worked hard on our second franchise arrangement during the year signing with a new partner Liverpool for Mexican market entry just before the end of the year. Mexico as a market has huge potential for us we believe and we're moving fast in this franchise space and taking together this acceleration plus to continue store expansion gives us a lot of confidence on the current four to five percent medium term expansion target. Building a better Primark is also about a stronger operating model, supporting our new growth routes, but also operating a simpler model. We've already taken a substantial amount of costs out last year with self-checkouts and labour cost savings in stores, as well as other broader supply chain efficiencies. However, I am signaling a step up in this programme. really addressing the complexities of our operating model that our operating model faces today to get us back to be more the most efficient and simple we can be we simply can't be a value leader without being a cost leader and we see significant cost efficiency opportunity across all areas more to come in this space of course technology automation and data investment will be needed to simplify and fund growth An illustration of this are the investments we're putting into driving customer availability. This includes a new investment in RFID technology for our ranges which will be rolling out in phases over the coming months. We see both considerable like for like and cost opportunity across all markets with that investment. This is about getting us back to being the most efficient model, simple and scalable. So thank you, all in all very clear on the direction of the business and a lot of exciting times at hand and I look forward to your questions later.