ASSOCIATED BRITISH FOODS (ABF) SHARES: 2025 PERFORMANCE IN UK, KEY DRIVERS, MILESTONES AND RISKS —'26 OUTLOOK

How did Associated British Foods perform in 2025?

In 2025, Associated British Foods (ABF) demonstrated a robust financial performance across its diversified portfolio, marked by steady revenue growth, cost optimisation, and strategic investments. This UK-headquartered conglomerate, whose divisions span food production, ingredients, agriculture, and retail (notably Primark), managed to capitalise on post-pandemic recovery trends and shifting consumer behaviour. The company’s shares responded accordingly, recording relative outperformance versus the FTSE 100.

Key financial indicators from ABF’s 2025 fiscal year show resurgent growth momentum:

• Revenue: Group revenue rose by 7.2% year-on-year, driven by strength in the Primark retail division and recovery in the Sugar and Ingredients sectors.
• Operating profit: Adjusted operating profit increased by 10.4%, reflecting improved margins and operational discipline.
• Free cash flow: ABF noted significantly improved free cash flow, partially owing to disciplined capital expenditures and stable working capital dynamics.
• Dividend: A full-year dividend increase of 8% was approved, which bolstered investor confidence amid macroeconomic uncertainty.

The retail arm, Primark, proved to be a cornerstone for earnings growth, delivering enhanced margins resulting from supply chain efficiencies and a focus on expanding its digital footprint via click-and-collect services in the UK. After several years of a strictly bricks-and-mortar strategy, the integration of online elements marked a strategic shift aligned with evolving consumer demand.

Meanwhile, the Food division regained ground as inflationary pressures normalised, with cost pressures on raw materials such as wheat and energy easing. ABF's ability to pass on price increases earlier in the cycle without significant volume decline played to their strategic pricing advantage.

In the Ingredients division, performance reflected global demand resilience, notably within enzymes and yeast technologies, driven by global food and biofuel sectors. Growth in emerging markets, particularly Asia-Pacific and Latin America, supported volume growth despite adverse currency effects.

Geopolitical conditions, including stable trade relations with the EU post-Brexit, provided further tailwinds. Additionally, cautious expansion in international markets and reinvestment in sustainable agriculture practices lent credibility to ABF's ESG performance ratings.

Share price performance: During 2025, ABF stock appreciated approximately 18%, outperforming sector peers as earnings visibility improved and inflationary fears subsided.

Overall, ABF succeeded in navigating a complex economic landscape, leveraging its diversified income streams and efficient cost controls to produce superior shareholder returns. The year concluded with positive sentiment and an optimistic 2026 outlook, contingent on continued consumer confidence and commodity price stability.

What impacted Associated British Foods' 2025 shares?

ABF’s share performance in 2025 was influenced by several strategic and macroeconomic drivers. These factors not only underpinned short-term financial improvements but also contributed to investor sentiment based on medium-term structural advantages.

1. Retail turnaround and Primark’s evolution

Primark remained the central pillar of ABF’s performance thanks to:

• Stronger footfall recovery across UK and European high streets
• Sustained low-price appeal amid cost-of-living pressures
• Successful roll-out of an enhanced click-and-collect model in the UK
• New store openings in Spain, France, and key UK cities

The shifting towards omnichannel experiences—though still limited compared to online-first competitors—allowed Primark to attract digital-first consumers while preserving margins through in-store exclusivity and controlled pricing.

2. Commodity normalisation and pricing strategy

ABF’s success in managing volatile global commodities markets was instrumental in driving margin expansion. The latter half of 2025 saw a decline in inflation linked to energy and raw materials such as sugar and vegetable oils. This gave ABF breathing space to:

• Reprice product lines under its Grocery and Ingredients divisions
• Consolidate supplier contracts with reduced cost passthrough
• Support profitability without compromising competitive positioning

3. Geographic and sectoral diversification

ABF’s structure mitigates risk through its portfolio diversification across four major divisions:

• Grocery: Including well-known UK brands like Twinings and Kingsmill
• Sugar: Operations across the UK, southern Africa, and China
• Agriculture: Continued innovation in sustainable animal feeds
• Ingredients: Resilience in baking and bio-product markets

This multi-sector model allowed ABF to adjust its focus depending on performance fluctuations and macro conditions.

4. Currency and interest rate stability

Relative stability in GBP and marginal interest rate hikes by the Bank of England meant minimal foreign exchange drag on earnings and limited additional debt obligations. With net cash positions strengthened earlier in the decade, ABF maintained financial flexibility, which helped investor sentiment.

5. ESG and sustainability emphasis

ABF furthered its commitment to sustainability in 2025 through:

• Lower Scope 1 and 2 emissions across manufacturing sites
• Investment in regenerative agriculture techniques across its supply chain
• Primark’s improved ethical sourcing transparency

These initiatives contributed positively to ABF’s ESG ratings and made its stock more attractive to institutional investors incorporating sustainability frameworks.

Together, these drivers emphasised ABF’s long-term credentials and underpinned not only a strong 2025 but also reinforced its broader investment case heading into 2026.

What risks and milestones could shape ABF in 2026?

As investors look ahead to 2026, Associated British Foods enters the year with a solid financial platform, but also a set of critical variables that may shape its performance trajectory. The company’s ability to navigate potential headwinds while capitalising on strategic accelerators will likely determine share price evolution in the coming quarters.

1. Recessionary risks in UK and Europe

With macroeconomic forecasts clouded by potential stagnation or recession in core markets like the UK and Germany, discretionary retail—particularly Primark—remains exposed. Although known for affordability, any significant downturn in consumer confidence could soften topline growth.

Investors will be closely monitoring:

• UK consumer spending sentiment and retail footfall figures
• Inflationary data and BoE interest rate movements
• Performance resilience in Primark’s non-UK markets

2. Further digital and ecommerce development

Primark’s evolving approach to digital commerce remains a moving target. The click-and-collect trial shows promise but questions remain over scalability and long-term contribution to revenue. In 2026, expectations will heighten around:

• Further online service innovations to compete with digital-native rivals
• Integration with loyalty and CRM systems for customer data utilisation
• Potential pilot expansions beyond UK into EU stores

3. Environmental regulations and supply chain transparency

With growing regulatory scrutiny, particularly across the EU and UK’s post-Green Deal policies, ABF may face increased reporting and compliance requirements. Challenges will likely include:

• Enhanced due diligence on global supply chains
• Scope 3 emissions tracking and mitigation across agriculture and retail
• Pressure to reduce single-use plastics in Grocery brands

4. Capital allocation and M&A strategy

With £1.5bn in net cash and low leverage, ABF has the capacity for acquisitions or increased shareholder returns. However, clarity on strategic direction will be required. Possible developments to monitor:

• Acquisitions in speciality food ingredients or health nutrition sectors
• Increased returns of capital via special dividends or buybacks
• Organic investment in digital infrastructure or agricultural innovation

5. Brexit rule transitions and global trade

While 2025 was relatively stable on trade, post-Brexit adjustments continue into 2026. Since ABF operates globally, any shifts in:

• UK-EU tariffs or regulatory divergence affecting supply chains
• Import/export dynamics for raw materials and finished consumer goods
• Emerging markets exposure to trade volatility or sanctions

—will be material to costs and margin assumptions.

6. Currency and inflation resurgence

Any uptick in inflation driven by energy prices or geopolitical tensions could rekindle input cost pressures across ABF’s segments. Future profit preservation will again rely on pricing power and cost containment.

In essence, 2026 will require Associated British Foods to strike a balance between financial prudence and strategic agility. Execution risks remain, but optionality through diversified business lines and a conservative balance sheet give the firm a sturdy base to manoeuvre in a volatile environment.