21 April 2026
ABF’s decision to demerge Primark by the end of 2027 has been long expected, but it is not the value‑unlocking moment some might hope for. The separation will leave two FTSE 100 companies, both ultimately family‑owned via charitable trusts, which underlines that this is more about structure than strategy.
Primark remains a large, low‑margin European retailer facing structural pressures, particularly in Germany, and this is not the sort of growth story that commands a meaningful re‑rating. A decade ago the separation might have landed differently, but today the retail backdrop is far less forgiving.
The rest of the group lacks coherence. ABF’s food businesses span sugar, agriculture, ingredients and grocery across multiple geographies, creating a portfolio of decent assets without a clear strategic centre, especially when compared with more focused peers. Recent trading underlines the challenge. Interim results were weak, with sales down 2% and earnings down 15%, driven by a soft European consumer and continued pressure in the US.
The US grocery exposure is a particular drag. ABF’s cooking oil business, which is heavily geared towards Hispanic consumers, has seen demand fall as tougher immigration enforcement has reduced shopping trips and footfall. That politically driven dynamic has affected a number of consumer staples groups, compounding what was already a difficult US trading environment.
The sugar division is the other clear negative. Low EU sugar prices are expected to push the business into a loss this year, underlining the volatility of an operation that has always been feast or famine.
Management suggests the demerger is still around 18 months away. While the second half may look better in isolation because the first half was so weak, full‑year profits are still expected to fall. Until the separation is much closer and the investment case on both sides is clearer, there is little reason for investors to engage with the stock.
