Associated British Foods (LON:ABF) Releases Earnings Results

Key Points

• Profitability weakened: Adjusted operating profit fell 14% and adjusted EPS declined 11%, with lower Primark profits and pressure in sugar weighing on results; revenue was down 1% at constant currency.
• Outlook remains cautious: Management expects adjusted operating profit and EPS to be below 2026 levels, citing sugar challenges and continued uncertainty around consumer sentiment, inflation and energy costs.
• Primark is pursuing growth and structural change: Plans include expansion via Middle East and Mexico partnerships and U.K. home delivery by the end of 2027; the proposed demerger remains on track for December 2027.

Associated British Foods (LON:ABF - Get Free Report) announced its quarterly earnings data on Tuesday. The company reported GBX 156 EPS for the quarter, Digital Look Earnings reports. Associated British Foods had a net margin of 4.89% and a return on equity of 8.44%. The company had revenue of GBX 1,958.20 billion for the quarter.

Here are the key takeaways from Associated British Foods' conference call:

• Group adjusted operating profit fell 14% and adjusted EPS declined 11%, with lower Primark profit the main driver; revenue was down 1% at constant currency. The dividend was held at £0.63 per share, and the company completed £250 million of buybacks.
• Primark sales grew 2% as new stores offset a 2.6% like-for-like decline, while its operating margin fell to 10.2% amid investment in pricing, product, marketing and digital, as well as higher markdowns. The U.K. returned to like-for-like growth, but continental Europe remained weak.
• Primark is expanding its growth plans through a Middle East franchise launch, a new Mexican partnership and planned U.K. home delivery by the end of 2027. Management said home delivery is designed to attract infrequent customers and be profitable without materially diluting group margins.
• Management expects group adjusted operating profit and adjusted EPS to be below 2026, mainly because of sugar, and cited continued caution around consumer sentiment, inflation and energy costs. European sugar recorded a £47 million adjusted operating loss, with high gas costs and low prices weighing on results.
• The proposed Primark demerger remains on track for December 2027, with management expecting two focused businesses and greater strategic flexibility. The group also highlighted Hovis integration synergies, which are expected to start in the second half of 2027 and contribute to earnings accretion in 2028.

Associated British Foods Stock Up 6.4%

Shares of Associated British Foods stock traded up GBX 121 during trading hours on Wednesday, hitting GBX 2,021. The company had a trading volume of 85,449,734 shares, compared to its average volume of 10,592,648. The company has a debt-to-equity ratio of 32.63, a current ratio of 1.51 and a quick ratio of 0.93. The company's 50-day moving average is GBX 1,911.35 and its two-hundred day moving average is GBX 1,915.42. The company has a market cap of £14.11 billion, a P/E ratio of 15.16, a price-to-earnings-growth ratio of 1.51 and a beta of 0.81. Associated British Foods has a twelve month low of GBX 1,729.45 and a twelve month high of GBX 2,294.

Associated British Foods News Roundup

Here are the key news stories impacting Associated British Foods this week:

• Neutral Sentiment: Group revenue increased, while quarterly results included earnings of GBX 156 per share. The revenue growth has not prevented pressure on profitability. Primark Owner AB Foods’ Revenue Rises Despite Sugar, Grocery Pressure
• Negative Sentiment: ABF reported a 13% fall in adjusted operating profit to £1.51 billion, with Primark and sugar weighing on performance. Reports also indicate the company expects full-year profit to decline further as fast-fashion sales slow. Associated British Foods Reports 13% Fall in Adjusted Operating Profit ABF forecasts further profit decline as fast-fashion sales slow
• Negative Sentiment: Jefferies reaffirmed its “underperform” rating and GBX 1,650 price target, signaling continued analyst concern about the shares. Jefferies Financial Group ratings

Analyst Upgrades and Downgrades

Several research firms have recently issued reports on ABF. Shore Capital Group reaffirmed a "hold" rating and set a GBX 1,910 price objective on shares of Associated British Foods in a research report on Tuesday, October 6th. Jefferies Financial Group restated an "underperform" rating and issued a GBX 1,650 price target on shares of Associated British Foods in a research note on Wednesday. JPMorgan Chase & Co. decreased their price target on Associated British Foods from GBX 1,700 to GBX 1,645 and set a "neutral" rating for the company in a report on Friday, September 11th. Finally, Citigroup decreased their price target on Associated British Foods from GBX 1,550 to GBX 1,520 and set a "sector perform" rating for the company in a report on Wednesday, September 23rd. Five analysts have rated the stock with a Hold rating and two have given a Sell rating to the company. Based on data from MarketBeat.com, Associated British Foods has a consensus rating of "Reduce" and a consensus target price of GBX 1,782.14.

Associated British Foods Company Profile

Associated British Foods is a diversified international food, ingredients and retail group with sales of £13.9bn, 128,000 employees and operations in 53 countries across Europe, Africa, the Americas, Asia and Australia. Our purpose is to provide safe, nutritious, affordable food, and clothing that is great value for money. With the breadth of our business, our brands and global reach, ABF aims to consistently deliver value to its stakeholders. Our business is split into five segments: Grocery; Sugar; Agriculture; Ingredients; and Retail.

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