Associated British Foods: At The Margin

Research evidence excerpt

Associated British Foods: At The Margin

UK | General Retailers

Associated British Foods EquityJulyResearch1, 2026

ESTIMATE CHANGEAt The Margin

ABF's trading update call has prompted much debate. This is less focussed RATING UNDERPERFORM

on near-term trading dynamics (we saw Q3 LFL consistent with FY cons, PRICE 1,986.00p^

click here), but more on a shift of emphasis in FY27 from LFL rebuild PRICE TARGET | % TO PT 1,650.00p | -17%

to margin expansion. We think the strategy remains unchanged, and that 52W HIGH-LOW 2,359p - 1,729p

investment in the offer will continue to accelerate if LFLs remain soft. Our FLOAT (%) | ADV MM (USD) 38.0% | 29.55

estimates and views therefore remain largely unchanged, only reflecting the MARKET CAP £14.0B | $18.5B

Sugar downgrade. TICKER ABF LN

^Prior trading day's closing price unless otherwise

noted.

A fascinating call prompts much debate. We see the key points emerging from today's call:

Deep uncertainties remain in Sugar EBIT delivery in both FY26 and FY27. For example, FY (Sep) CHANGE TO JEFe JEF vs CONS•

whether there is a devaluation in the Malawian currency is a £25m swing factor. 2026 2027 2026 2027

Production costs, Tanzania ramp up, and onerous contracts are other key unknowns. REV NA NA +1% +1%

Commentary highlighted a subdued consumer, but one with significant volatility on EPS -1% -4% -1% -3%•

weather as the 'Iran conflict had an impact on consumer sentiment' in the UK, before

'bouncing back' in June with better weather. Beyond this they 'are seeing the benefit of our

sharper focus on price and from the improved product offer' but still 'early days' in Europe.

US dynamics among their core Hispanic customer are 'really struggling'.

Primark are 'managing stock levels very tightly', H2 will also have higher markdowns 'similar'•