AB Foods to demerge Primark after review

21st Apr 2026 07:00

(Sharecast News) - Associated British Foods on Tuesday said it planned to demerge its Primark retail clothing business from its food operations and list both entities in London after a review with its largest shareholder.

The Weston family's Wittington Investments, AB Foods' largest shareholder, said it would retain majority ownership of both entities.

George Weston, current chief executive and a member of the family that controls AB Foods, will lead the food business, while Eoin Tonge, previously a finance director at the firm and Marks & Spencer and Greencore before that, will remain as chief executive of Primark.

AB Foods shareholders will hold shares in both companies. Primark, which provides more than half of the conglomerate's profit, has 486 stores globally across 19 markets with approximately £9.5bn of annual revenue and more than 83,000 employees.

The foods business includes the Ovaltine, Patak's, Blue Dragon Ryvita and Twinings brands, along with a major sugar division and agriculture operations. The group expects to split before the end of 2027, with one-off separation costs of about £75m.

"This is an important step in the evolution of ABF. For our food business, the separation will enable greater understanding of the breadth and strength of our differentiated portfolio and its long-term growth opportunities as the only FTSE100 pure play food producer," said AB Foods chief executive George Weston.

"For Primark, it enables the creation of appropriate governance to maximise the future potential offered by Primark's powerful brand, strong customer proposition and opportunities in existing and new markets."

Confirmation of the spinoff came as AB Foods posted a 19% fall in adjusted pre-tax profits to £663m for the six months to February 28 and held its outlook for the full year. In January the company cuts its profit outlook due to weaker performances at Primark and US ingredients operations.

Group sales fell 2% to £9.46bn, while on a pre-tax basis profits were down 9% to £632m. Shares in the company fell 4% in early London trade.

The sugar business performed "below our expectations" and was now expected to report an annual loss, while grocery operations faced weak trading in the US.

Sales at established Primark stores across the world fell 2.7% in a "difficult clothing market", although in the UK they were up as the budget chain gained market share. However, this was offset by a 5.6% fall in mainland Europe due to weak consumer confidence and measures to link stores to online services were not as advanced as in the UK.

"An encouraging start to spring/summer trading in March was followed by softer trading in April as we started to see the impact of the Middle East conflict on the consumer," the company said.

Weston said AB Foods said based on current knowledge, the cost impact of the Middle East conflict was "manageable", but warned there was a risk to Primark sales if the conflict persists and consumer spending deteriorates.

Reporting by Frank Prenesti for Sharecast.com

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