Associated British Foods plc (LON: ABF) fell 4.9 percent on Tuesday April 21 to become the largest single-day decliner in the FTSE 100, after the company simultaneously confirmed it will proceed with a full demerger of Primark from its food operations and reported a sharp deterioration in first-half profits across all divisions. ABF shares closed the session at around the £16 area, with the FTSE 100 index itself broadly flat at approximately 10,609.
The demerger, which had been under consideration since November 2025 and was confirmed following a review conducted in consultation with Wittington Investments — the Weston family vehicle that holds a majority stake in ABF — will see Primark listed as a standalone company on the commercial category of the London Stock Exchange.
The remaining food Business will trade under the name FoodCo, though it will retain the Associated British Foods name. Separation costs are estimated at approximately £75 million, and completion is expected before the end of 2027, structured as a dividend demerger through which existing shareholders will receive shares in both entities. ABF chair Michael McLintock confirmed Wittington is “supportive of the proposed demerger” and will maintain majority ownership of both businesses post-split. CEO George Weston will lead FoodCo; Eoin Tonge will remain chief executive of Primark.
The financial results accompanying the announcement added to the negative sentiment. H1 2026 revenue fell 2 percent to £9.5 billion, with Primark posting 2 percent growth to £4.7 billion driven by new store openings, but all other divisions — Grocery, Ingredients, Sugar and Agriculture — declining. Underlying operating profit dropped 18 percent to £0.7 billion, with weakness spread across every segment. Full-year underlying operating profit is now expected to come in below last year’s £1.7 billion, confirming a guidance downgrade that had been signalled in January.
Net debt rose from £2.8 billion to £3.0 billion, though free cash flow improved from £27 million to £71 million as Primark inventory reductions took effect. ABF management acknowledged that elevated energy and freight costs linked to the Middle East conflict present an ongoing risk to margins, though hedging arrangements are expected to make direct cost impacts manageable in 2026. The bigger unknown, the company said, is the indirect effect on consumer spending if the conflict persists.
The market’s negative reaction reflects a combination of factors: the demerger is strategically sound in terms of unlocking cleaner investment cases for both businesses, but the near-term financial trajectory is clearly deteriorating, and investors now face an extended wait of up to eighteen months before the structural unlock is delivered. Primark operates 486 stores across 19 markets with approximately £9.5 billion in annual revenue. FoodCo, home to Twinings, Patak’s and Jordans, generates approximately £9.8 billion in revenue across 52 countries.