Associated British Foods revealed plans to possibly separate its Primark fashion chain from the food division amid tough market conditions. The announcement came with a report of falling profits and sales, driven by high costs in sugar and agriculture operations on November 4, 2025.
The company, a major player in retail and food, aims to boost long-term value through this potential split. Leaders pointed to a challenging economy as the key reason behind the review.
Reasons Behind the Potential Split
Associated British Foods started a strategic review to explore dividing its businesses. This move involves input from advisors and support from the main shareholder, a family with deep ties to the company.
The review focuses on creating more value for investors and improving operations. No final choice has been made yet, but updates are expected soon.
Company heads noted that separating the fashion side from food could help each part grow better on its own. This comes after years of combined operations under one roof.
The largest shareholder plans to keep control of both if the split happens. This shows strong belief in the future of each business.
Financial Results Show Challenges
The latest yearly figures paint a picture of struggle. Pre-tax profits dropped sharply by over 25 percent to 1.4 billion pounds, while total revenues fell 3 percent to 19.4 billion pounds.
Higher costs hit the sugar and agriculture areas hard. The sugar unit alone posted a loss of 205 million pounds, with revenues down 12 percent to 2 billion pounds.
One big factor was closing a bioethanol plant, which added to the woes. Lower sugar prices in Europe also played a role in the decline.
Overall, the group faced pressure from rising expenses and weak demand in some markets. These issues led to the profit squeeze across the board.
Primark Performance in Detail
Primark saw a small sales increase of 1 percent to 9.5 billion pounds. Growth in new markets like the United States helped offset drops elsewhere.
In the UK and Ireland, sales at existing stores fell 3 percent. Warmer weather last autumn hurt demand for seasonal clothes.
The chain expanded with new stores in Europe, driving 2 percent sales growth there. In the US, sales jumped 20 percent as Primark builds its presence.
- Key markets for Primark include the UK with 187 stores.
- The brand operates in 18 countries total, with over 470 locations.
- Focus areas for growth are mainland Europe and North America.
Shoppers on tight budgets felt the pinch from high energy and food costs. This led to weaker spending among low-income groups.
Impact on Food Division
The food side, which includes brands like Twinings tea and Kingsmill bread, faced its own hurdles. Higher costs in agriculture and sugar production dragged down results.
Sugar operations turned unprofitable due to market shifts and plant closures. This division’s struggles were a main driver of the overall profit fall.
Agriculture also dealt with increased expenses, adding to the pressure. The company highlighted low European sugar prices as a key issue.
Despite these problems, some grocery areas held steady. Leaders see potential for recovery if market conditions improve.
Here’s a quick look at key financial changes:
| Division | Revenue Change | Key Notes |
|---|---|---|
| Primark | +1% to £9.5bn | Growth in US and Europe offset UK drops |
| Sugar | -12% to £2bn | Losses from closures and low prices |
| Overall Group | -3% to £19.4bn | Profits down over 25% to £1.4bn |
Broader Market Context
This news fits into wider trends in retail and food industries. Many companies are splitting to focus on strong areas amid economic uncertainty.
Recent UK budget changes raised concerns about taxes hitting high streets. Some firms worry this could slow investment in the country.
Associated British Foods has a history of acquisitions and expansions. For example, it recently bought a bread rival, showing ongoing growth plans.
The Weston family, behind the company, ranks high on wealth lists. Their support for the split review underscores commitment to long-term success.
What Happens Next
The strategic review could lead to big changes for Associated British Foods. If approved, the split might happen in stages to minimize disruption.
Investors are watching closely for updates. The company promised to share more details soon.
In the meantime, Primark continues opening stores and adapting to shopper needs. The food division aims to cut costs and boost efficiency.
This potential shift could reshape how these businesses operate in a tough economy.
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