Okay, good morning, everyone. Thank you all for coming today. For those of you who don't know me, I'm Michael McLintock, and I'm Chairman of ABF. Before we get into the detail of the results, I just wanted to make a few remarks in relation to our announcement today that we are undertaking a review of the group structure. As a board, we do, as a matter of course, regularly assess the appropriateness of the group structure. However, the current review is more substantive and has been running for a while. It has reached the point where there are two options: to stay as we are or to split into the separate businesses of Retail and Food.
Another of our considerations is whether our Retail and Food businesses have now reached a point in their development where they would each benefit from greater independence and a clearer line of sight into their respective activities. We believe both businesses have exciting opportunities ahead of them, but separation might lead to better understanding, which is something that should benefit our Food businesses especially. I emphasize that no decision has yet been made. Splitting the group into two reestanding businesses is a complex proposition, and we need more time to confirm feasibility. Nevertheless, the fact that we're saying something today reflects the fact that there is a fair chance of a separation occurring, and making the announcement gives us the opportunity to consult with all our stakeholders without fear of leaking potentially sensitive information.
I'm leading the review, and it's been carried out in consultation with our largest shareholder, Wittington, who have indicated that in the event of a split, they intend to maintain majority ownership of both parts of the group. Since no decision has yet been taken, you will appreciate that there is a limit to what more I can say at the moment, but we look forward to discussing the review with all our stakeholders, and we will, of course, provide an update as soon as it's practicable. With that, I'll hand over to George and the team.
Thank you, Michael. Good morning, and thank you all for joining us. We are here, of course, this morning to review ABF's annual results for the 52 weeks ending the 13th of September 2025. Before I go into the results, I wanted to say and make clear that I fully support the board's review, and I have been and will continue to be closely involved and working with the board throughout. I'm delighted to be joined by Joana Edwards, ABF's Interim Finance Director. Joana will give a detailed review of our financial results shortly. I have also invited Eoin Tonge to join us this morning in his role as Interim Chief Executive of Primark. A lot of good work has been happening in Primark over the last few months and lots more to come, and I have asked Eoin to give you an update on that this morning.
Our financial results for the group this year show sales down 1% and adjusted operating profit down 12%. This was due almost entirely to Sugars profits going from close to GBP 200 million in 2024 down to only break-even in 2025. That is the result of the sharp drop-off in European sugar prices in the summer of 2024. Prices, sadly, have remained persistently low since then. The rest of our businesses delivered robust financial results against the challenging external backdrop, sanctions, as are tariffs at all. We have kept, though, our interim and final dividends in line with last year, which we have announced today a new buyback program of GBP 250 million, which will be completed in 2026. We are really quite confident about the future. 2025 was a year of intense activity in ABF.
As you know, we are about building brands and businesses that will deliver growth, cash generation, and strong returns. To that end, we invested GBP 1.2 billion of capital this year across Primark and our Food businesses. We are now well through the bow wave of investment in our Food businesses. A number of large multi-year projects were either completed recently or will be completed in the next few months. These are exciting projects, growth projects that will still be delivering value, I think, in 50 years' time. Another thing we have been doing is fixing businesses. I said in April that we had three loss-making businesses that we would take action to address, and we have. Firstly, and sadly, we closed our Vivergo bioethanol plant in the U.K.
The regulations in any other country in the world would have meant this business was profitable, but it was the right thing, therefore, to do to fight for its survival. However, the U.K. government decided not to make the intervention we needed, and we could not tolerate continued losses, and so it is gone. Secondly, we substantially restructured our beet manufacturing footprint in northern Spain, reducing the number of facilities from three down to one. This follows recent action to exit our Sugar businesses in Mozambique and in northern China, and I will talk more about Sugar later. Thirdly, we reached an agreement to acquire Hovis Group. Combining their production and distribution with ours will deliver significant cost synergies and will enable innovation. This will create a U.K. bakeries business that's sustainably profitable. The transaction is subject to CMA approval, and we're working closely with them through their review.
Alongside reinvestment in our business, we've delivered strong capital returns to shareholders in 2025. This included just under GBP 600 million through buybacks in the year. Over the last three years, we've returned GBP 3.2 billion to shareholders through dividends and share buybacks. Before Joana goes through the financial results in detail, I'll share some color. In Primark, we've reviewed our focus on a number of initiatives to drive like-for-like sales growth, and the business is in mid-flight on a lot of very good work. This includes improving price perception and improving our product offer. Progress in the U.K. has been really encouraging. The business is back on a stronger footing, and there's more to come. We've still got work to do in Europe, but we know what's required, and there are plans in place.
The consumer environment, though, is weak, particularly in the U.K., but also in Europe, and Primark's like-for-likes declined in the year. Space growth was well executed, and profit delivery was good. Grocery performance was as we had expected. Our international brands are growing, but that is being masked by declines in U.S. oils and U.K. bread. Ingredients perform well in both Grocery and Ingredients were benefiting from sustained investment in those businesses. Sugar profit was break-even this year, excluding the loss in our Vivergo bioethanol plant. We've made progress, but there's still more work to be done, which I'll cover later. Agriculture profit was lower this year due to one-offs and less contribution to our joint venture. With that, I'll hand over to Joana.
Thank you, George. Good morning, everyone. Let me take you through the results in more detail. Group revenue was GBP 19.5 billion, which at constant currency was 1% below last year. Of note, this year there was a negative impact of foreign exchange translation of approximately GBP 450 million. Group adjusted operating profit was GBP 1.7 billion, a decrease of 12% at constant currency due to the reduction in Sugar profits. At actual rates, the decline was 13%, again an adverse translation impact of around GBP 50 million, mainly from sterling strengthening against the U.S. dollar, but also from some of our African currencies. Let me take you through the performance by segment. Starting with Retail, and I have a couple of slides on Primark. Looking first at sales, which grew 1% to GBP 9.5 billion. Like-for-like sales declined 2.3%.
The dynamics in these were very different between the two halves of the year, and also different in the U.K. and Ireland compared to continental Europe. In the U.K. and Ireland, like-for-like sales declined 6% in the first half. The clothing market declined in a weak consumer environment, particularly within elements of Primark's shopper base. In the second half, Primark's U.K. trading showed a good sequential improvement. Like-for-like sales were broadly flat, and Primark gained market share. This was a result of a number of initiatives to strengthen our value proposition and product offer. In Europe, the shape was the opposite. A strong first half was followed by weaker trading in the second half. As George said, we have more to do in some of our European markets. Eoin will talk this morning about the actions we have been taking in the U.K.
and our plans for similar initiatives in Europe. Our store rollout program contributed 4% to growth, with good execution across our key growth markets in Europe and the U.S. Primark's adjusted operating profit grew 2% to GBP 1.1 billion, and adjusted operating profit margin was 11.9%. Excluding a non-recurring benefit in the year of around GBP 20 million, the underlying margin was broadly in line with last year's margin. Gross margin improved in 2025 due to favorable foreign exchange, supplier efficiencies, and effective markdown management. Our focus on cost optimization and efficiencies broadly offset wage inflation and a significant step up in investment across product, brand, and digital initiatives. Part of those efficiency savings come from the investments we have made in technology and automation in recent years. Moving to Grocery. Sales of GBP 4.1 billion were in line with 2024 and adjusted operating profit decreased 4% at constant currency.
Our two largest international brands, Twinings and Ovaltine, delivered good sales growth supported by investment in marketing, strong commercial execution, and product innovation. These figures also benefit from consolidating our acquisition of the artisanal group in Australia. As expected, lower sales and profit in both U.S. oils and Allied Bakeries led to an overall decline of 4% in Grocery adjusted operating profit. Ingredients sales of GBP 2 billion were in line with last year at constant currency. Our Yeast and Bakery Ingredients businesses, AB Mauri, delivered good underlying growth. This was offset by the impact of hyperinflation accounting treatment in Argentina. In Specialty Ingredients, most of our portfolio performed well. Our enzymes and health and nutrition businesses had particularly strong growth, offset by lower sales in one of our pharmaceutical businesses. Prior year acquisition in Specialty Yeast and Bakery Ingredients contributed to growth.
Adjusted operating profit for Ingredients grew 16% at constant currency. This was supported by a continued focus on productivity savings across our supply chains and good management of input costs. As expected, Sugar sales declined 10%, and the segment had an adjusted operating loss of GBP 2 million. The operating loss in our Vivergo bioethanol plant of GBP 36 million is excluded here and separately captured within disposed and closed operations. In the U.K. and Spain, low European sugar prices and high bid costs drove significant operating losses. As we said back at the interim results in April, our cost base in Spain is structurally too high. Since then, we have completed restructuring in our northern bid operations to reduce our footprint from three facilities to one. We will continue to reduce costs and improve efficiency in our operations. In Africa, performance was mixed.
We had good growth in Malawi and Eswatini, whereas droughts impacted production costs and profitability in Zambia and South Africa. In Tanzania, there was an impact from sugar imports that were higher than usual. Our new sugar mill began production last week and will significantly increase domestic supply. George will talk in more detail shortly about the building blocks to improve profitability going forward. Agriculture sales decreased 1%. Adjusted operating profit decreased from GBP 41 million in 2024 to GBP 25 million in 2025. This reflects two things: a reduced profit contribution from our joint venture, Frontier, as a result of exceptional weather conditions, and secondly, one-off costs in the year. Our Specialty Feed and Additives business performed well, and we had good growth in our dairy business. Sales in our compound feed business remained soft. I showed this slide at the interims in April.
In a year where there was a significant focus of the implications of U.S. tariffs, this is a reminder that ABF's exposure to the U.S. is modest, at around 9% of group revenue, and of this, around half is domestically sourced. Moving to adjusted earnings and adjusted earnings per share. Two things I want to highlight here. Firstly, on tax. The adjusted effective tax rate was 24.2% this year, similar to the tax rate at the half, and up from 23.1% last year. This was mainly due to the introduction of Pillar Two tax rules, which increased our tax rate in Ireland. We expect the group's effective tax rate in 2026 to remain broadly in line with 2025. Secondly, you can see that the adjusted earnings per share have benefited from the share buybacks.
We estimate the accretion to EPS on a cumulative basis since the start of the buybacks to be about 7%. Note, basic earnings per share includes exceptional charges of GBP 188 million compared to GBP 35 million in 2024, as well as losses on closure of business of GBP 32 million. Free cash flow was GBP 648 million compared to GBP 1.4 billion last year. There are two reasons for the reduction. On one hand, the lower operating profit, and on the other hand, the year-on-year movement in working capital. In 2024, as I explained at the interims, there was a working capital inflow of GBP 305 million, which was mainly due to Primark's inventories reducing to more normal levels after all the supply chain disruptions the year before. In 2025, there was a working capital outflow of GBP 95 million, mainly due to slightly higher Primark inventories.
You can see capital expenditure at GBP 1.2 billion, which was in line with last year, and I'll come on to the details of that spend shortly. One point to note on cash tax. In 2025, it was lower than last year due to a one-off EU state aid refund of GBP 25 million. Without this benefit, we expect tax cash in 2026 to be moderately higher. Our balance sheet remains strong and continues to support investment and shareholder returns. A few things to highlight on this slide. Firstly, you can see that working capital was broadly in line with last year. Secondly, the lower cash balance of GBP 0.4 billion reflects the shareholder returns we made in the year, both in dividends and share buybacks. Finally, the pension surplus. This continues to grow and is very significant at GBP 1.6 billion, underlining the strength of our financial position.
Turning now to cash and liquidity. Our year-end net debt position, including lease liabilities, was GBP 2.6 billion compared to GBP 2 billion last year. This is due to the cash reduction I've just explained. Our leverage ratio was one times and is an increase on last year, but well within our capital allocation policy. Total liquidity was GBP 2.2 billion, and this robust position underpins our ability to continue investing in growth while maintaining resilience and flexibility. Our capital allocation policy prioritized disciplined investment to drive long-term growth. In 2025, we invested GBP 1.2 billion across the group. Around 40% in Primark, where we continue to roll out stores, invest in our depot network, and add new technology. The remaining 60% was in our Food businesses. A large amount of the spend was on multi-year projects that have either completed in 2025 or will complete in 2026.
It is worth noting that across ABF , around GBP 100 million of this year's CapEx investment was in technology, including automation to drive efficiency in our supply chains and new ERP systems to strengthen efficiency and decision-making in the businesses. We expect CapEx to remain at a similar level in 2026. Part of our capital allocation approach is to return excess capital to shareholders, both through dividends and share buybacks. Starting with dividends, we are proposing a total dividend of GBP 0.63, which includes an interim dividend and a proposed final dividend in line with 2024. That is a reduced level of dividend cover but reflects our confidence in the outlook for the group. In terms of share buybacks, during 2025, we completed GBP 594 million of buybacks.
Looking at our total shareholder returns in the last three years, we have returned GBP 1.6 billion in paid and proposed dividends and GBP 1.6 billion in share buybacks. Today, we have announced an additional share buyback program of GBP 250 million, which we expect to complete in the 2026 financial year. These shareholder returns, alongside our continued capital investment in the businesses, demonstrate our disciplined approach to capital allocation and our commitment to delivering long-term value for shareholders. I'll finish on the outlook for 2026. For the group overall this year, we expect to deliver growth in adjusted operating profit and adjusted EPS. I will not read out the segmental guidance in detail, as you have it both on the slide and also in the R&S. In Primark, we continue to expect the consumer environment to remain subdued.
We are focused on a number of initiatives to strengthen our value proposition with a view to driving like-for-like sales growth, and we expect new space to contribute around 4% to sales. Next year's margin will reflect investment in growth. We expect overall profit in Grocery and Ingredients to be broadly at this year's levels. In Sugar, we expect some improvement in profit. With that, let me hand you back to George.
The biggest change in Primark this year has been the leadership. You will all want to know who the permanent CEO will be. I can tell you that we are well underway with the selection process, and I will update you once the decision has been made. I would hope that we can do that early in the new year. I am extremely pleased with what Eoin has achieved in the interim role over the past seven months. He has successfully brought together and empowered the leadership team in Primark. He has driven forward a number of critical trading and operational initiatives across product, technology, route to market, supply chain, and marketing. These are progressing at pace and will better position Primark for future growth and expansion.
A key priority for Eoin and the team has been how best to unlock the growth potential of Primark's proposition, both in like-for-like sales growth and space expansion. We recognize the competitive challenges in our marketplace and that customers today take a more complex route to purchase in our stores. However, two things are clear. One is the continued differentiation of Primark's value proposition, offering unbeatable prices for great quality clothing. Two is the strength of our brand. Two weeks ago, I was in Kuwait with Eoin and others for the opening of our first store in the region. No shopping center in the Middle East has seen a store opening like it. The queue was 300 m long at its opening, and four hours later, it was still 200 m long. The average basket size was 27 items.
Our ambition on new space continues and was well executed this year. However, we're also rebalancing our focus onto driving sustainable like-for-like growth across our markets and putting a renewed emphasis on strengthening our proposition, including on price perception and our product offer. Clearly, the last 12 months of trading have been very challenging. Consumer sentiment in both the U.K. and Europe has been weak, and particularly so for Primark's core customer base. In that environment, though, we need to execute better. With that, I'll hand over to Eoin to share his thoughts.
Thank you, George. Good morning, everyone. It's nice to be here with you all. Yeah, so it's been a busy seven months. On the key areas of focus that George has mentioned, I think there was already a lot of work going on in Primark. I think what we've done is really just challenge ourselves to take a hard look at our operating environment and then be very precise about what we're going after. The consumer backdrop is challenging. Our customers have more, and in some cases, newer choices in the value space. We also recognize our world has evolved, as George has said. The customer journey to our stores is more fragmented and more complex than it used to be.
We fundamentally believe that our core proposition has never been more relevant to consumers, but we know we have some work to do to enable our customers to rediscover our value disruptor edge. Primark is the original value disruptor, and we remain that today. We need to make sure that it is always front of mind for our customers. Let me tell you what we're doing. In approaching this, our priority in all markets is like-for-like sales growth.
This is about sharpening our value proposition, starting with price and specifically price perception, while at the same time strengthening our product, starting with women's wear, better integrating our customer engagement, and of course, continuing to develop our digital capabilities to enable all of this, all the while thinking hard as to how we attack the significant white space available to us and driving cost optimization to enable further investment in the proposition. Let me give you a color on all of those items, starting with value and price perception. Look, we still have the lowest prices in all the markets we operate in. As always, we've continued to reduce our prices whenever we've seen our competitor prices below ours to maintain our price leadership in every market. As a reminder, around 85% of our products are priced at GBP 10 or equivalent or less.
In today's environment, we need to keep reminding customers of this unbelievable value, especially as we've broadened our product offering. There is actually more to do here, but we've made some progress in the year. We started off with a campaign in April called Never Basic. It was to remind customers of the extraordinary entry prices that we have in our essentials. We also refreshed our in-store communication, so our prices are now much more visible to customers. It's all basic stuff, but Retail is all basic stuff. In some markets where the need is greater, we will increase this further. We want to do more to get more assertive on communicating our value credentials to customers. We recently launched Major Find, which simply put is [Wow] product at [Wow] prices. Limited edition fashion items at low price points to create a standout must-have deal.
We started that in the U.K. and Ireland, and we'll be rolling that out into Europe in the coming month or so. Early days, but we've seen that this type of initiative is resonating with customers hungry for value and will drive both footfall and attachment sales. This is just the first example, and going forward, you'll see us really doubling down on communicating our value proposition to customers and getting a lot more disruptive to remind them what Primark is all about. Low prices are, of course, only one part of our value equation. You need to have a differentiated quality product offering to go with them, which brings me on to what we're doing on products. Primark continues to offer great quality essential clothing and fashion, and we've been developing our ranges nicely throughout the year.
About half of our range is women's wear, which includes fashion, accessories, underwear, nightwear, and footwear. It's the engine of our like-for-like growth. No surprise that when we started to focus on our product evolving, we focused here in women's wear first. We've been building and promoting talent in our team, including some leadership changes, and we've developed a much more targeted women's wear strategy overall. I'll give you a flavor of elements of that. Primark has always been about making fashion trends more accessible to every consumer. The best example last year was our investment in performance wear and the very strong results it delivered. Our product is high quality, stylish, with strong innovation and fabric, all at affordable and accessible prices, really Primark at its best. Another big initiative is coordination.
We've seen last year that as we've done a better job of curating ranges for customers, we get a strong like-for-like benefit. Our Paula Echevarría collection is the best example of this, which has continued to grow. The sales in our last campaign were up 7% on the same launch last year. We'll be doing more of this coordination approach for ranges this year. Primark is famous for everyday essentials, and I'd call out our success in nightwear in particular, where we're leveraging our strength to respond to newer trends. If anyone has seen the recent viral moments and store sellouts in a number of our pajama prints, it really feels like the old Primark again. Overall, these actions we've taken in women's wear are delivering results.
We've seen a strong sequential improvement in women's wear sales in the second half of 2025 compared to H1, particularly in the U.K., where the initiatives were combined with increased marketing support. Progress hasn't just been in women's wear. Kidswear also progressed well last year. A key driver there has been Eunice, both in own label and through the successful expansion of our licensed offer. As an aside, I feel there is much more we can do to leverage the benefit of our strong relationships with key brands in culture, including Disney and Netflix. I'm not going to talk much about men's wear today, but we're making many of the same developments that I've spoken about in women's wear. Growth in performance wear is a great example of that.
Our lifestyle categories, however, such as health and beauty and home, which account for about 10% of our sales, really had a tough year and contributed significantly to our like-for-like challenge last year. We've got more work to do in those categories, but I believe there is still a lot of opportunity as we sharpen our proposition. Onto customer engagement. We're really at the foothills of integrated customer engagement around our compelling value proposition. That said, we made some progress this year, which I think is setting us up well. We've been using paid social marketing for a number of years now, which has driven good conversion with strong ROIs. That discontinued last year, particularly in the U.K., and again, with good uplifts delivered. For example, increased revenue from paid media was up 30%. Increased efficiency of paid media was up 5%.
We've also continued with our brand affinity campaign in Germany and our brand awareness campaign in the U.S. The impact we've seen on our brand metrics has been positive, but more to do to optimize our marketing approach. Towards the end of the year, we had our first truly integrated performance marketing campaign in the U.K., which focused on denim, which has been a tough category for us for a few years now. The In Denim We Can campaign was a multi-channel campaign, including out of home, paid social media, TV advertising, and visual merchandising. The response has been good, not just because our denim sales have been up 12% in the U.K. following the campaign. It has also had a positive impact on our brand metrics, including consideration and brand reappraisal. There's so much to go after as we continue to integrate and optimize our brand and marketing approach.
The initial focus, as George has mentioned, has been in the U.K., but we'll expand this to other markets in the coming year. What's underpinning our more integrated customer touchpoints is continued investment in our digital assets. We've continued to invest in the customer experience on our website, including better functionality. We've had 177 million visits to our primark.com websites last year and increased to 24%. Customers are spending more time on our website and are viewing more of our products. Critically, 20% of the website visits this year. Customers have used the stock checker, which is the best measure of intent to convert. Plus, our CRM database continues to grow. It's reaching 4 million customers, and our survey data shows that emails have been a strong driver of store visits. Finally, we launched our Primark app in the year.
It's only in Ireland and Italy so far, but the results have been good, and we're going to roll that out into other markets this year, including the U.K. Our Click & Collect service now has been available from all British shore stores since the end of May. It's contributing nicely to growth, and the metrics have remained very strong. The average basket size was around 25% higher than the U.K. average, and we've had at least a 40% attachment rate when people come into stores to pick up their Click & Collect, again with higher average basket size. Our data shows that one in four Click & Collect customers have not shopped with Primark for at least two years prior to their first Click & Collect purchase. Importantly, there's plenty more to do to optimize the range and drive customer awareness. Over 1/3 of our U.K. customer base are still not aware we offer the service.
Given our comfort level on the customer and the financial metrics of the service in the U.K., we're exploring the potential to offer Cliick & Collect service in other markets over the coming years as part of more integrated market growth plans. New space contributed 4% to sales growth in 2025. We opened 23 stores in Europe and the U.S. In the U.S., it included our first stores in Texas and Tennessee. There is, of course, a lot going on in the U.S. at the moment with tariffs and the consumer reaction to increased pricing across the market. We have an exciting year ahead. The number of store openings will be our largest yet in this current year and includes a flagship in Manhattan, which is obviously significant from a brand awareness perspective. We've also opened the first stores with our new design concept in Europe last year.
This enables us to expand our footprint across different store sizes while still maintaining strong sales entities. It will be a key enabler for smaller store openings outside of key cities. As George talked about, we had a great time opening our first franchise store in Kuwait a couple of weeks ago, which had an amazing initial reaction. We are getting ready for three openings in Dubai early in the calendar year 2026. Franchising is an important new capability for Primark and has the potential to open up significant new market opportunities in the future. We are confident that our store rollout program, which now includes franchise, will continue to contribute 4%-5% of sales growth for the foreseeable future. To continue investing in the customer value proposition, we have to drive continued cost optimization.
As with any retailer, cost optimization is focused within stores, in our supply chain, and in central operations. There is still a lot of opportunity to go after, and we made decent progress last year. We now have self-checkouts in 195 stores. Self-checkouts have the potential to reduce labor hours in a typical store by about 10%. They also help the customer experience if executed well, and they have not driven increased stock loss. LED lighting is now in over 320 stores and, on average, has reduced our energy consumption by 35%. We are making some progress with a number of ongoing projects in our warehouses to either fully or partially introduce labor-saving automation. We have also identified opportunities to drive savings in our central costs. For example, we announced this year that we are moving to a global business service arrangement for certain central functions.
Cost optimization will, of course, be a multi-year project. Finally, on sustainability, although it has lost focus in some circles, it has not at Primark. You can see from the metrics we are making good progress. Given our scale and volumes, I would particularly like to call out what Primark is doing to drive circularity in fashion. This is all about keeping products and materials in use for longer, making them more durable, as well as aiming to reduce waste over time. This includes embedding circular design principles into how products are created. We have made really good progress here. 20% of all jerseys and 8% of all denim products are now circular by design, as defined by our standard. Which, again, considering our scale, really brings to life how we are really making a difference. 74% of our clothes are now made from recycled or more sustainable materials.
We are reviewing our approach to sustainability. We believe there is an opportunity to make more progress if we focus on a smaller number of more impactful activities. We will update more on this review through the year. That is Primark. Hopefully, you will see we have a clear plan and focus. Let me hand you back to George, and I will come back to your questions.
Thank you, Eoin. Now, let me take you through our Food businesses and starting with Grocery. We are building Grocery brands and businesses to drive long-term profitable growth and strong cash generation. We are investing more in marketing to both drive volume growth and underpin strong brand equity. We are growing our portfolios through product innovation as we respond to global consumer trends like premiumization, convenience, and health and wellness. You can see our current footprint on this chart.
We focus on geographies with attractive long-term demographics and market fundamentals. Typically, these are English-speaking and with growing populations, either naturally or from immigration. We are investing in the capacity and the capability to be able to grow in new and existing market channels as well. Given the breadth of ABF's portfolio, I will focus today on just three of our key brands. I start with Twinings, which is one of our largest and our fastest-growing brands. Twinings has had consistently good volume-led growth in recent years, something like 3%-4% compound. This has delivered meaningful growth in market share in three of its largest markets: the U.S., France, and Australia. In the U.K., Twinings has had very meaningful growth in market share in fruit and herbal infusions and in benefit blends.
Twinings' growth reflects disciplined and patient execution. It has included a focused program of product innovation supported by clear consumer insights and testing. We have increased the effectiveness and sufficiency of our advertising to deliver strong returns. That is what sits behind the volume growth. As you know, our strategy is to maintain the strong position that Twinings holds in black tea and leverage that to grow wellness teas. Consumers are looking for great tasting and naturally caffeine-free beverages that are good for you. In 2025, our growth rate for both green teas and herbal infusions was in the high single digits, and benefit blends grew double digits. Twinings has an exciting and very long runway for continued growth. This includes expansion in our smaller markets as we start to deploy our now proven blueprint for growth.
Markets such as Italy, the Nordics, and the Middle East, which I saw the other day, all grew well this year. Ovaltine is the other large-scale growth engine within our international brands. We have made some progress in recent years, but we have also had to navigate some headwinds. In 2025, we had to manage through a steep increase in cocoa raw material costs. Inevitably, the need for price increases led to some tough negotiations with retailers, and that impacted volumes. It also led to consumers in less affluent countries walking away from the category. We are now through that. Ovaltine is a brand with a unique taste. It has very strong brand awareness and equity in the markets where we sell. This means we can leverage our strong base and market share in powder products to grow through innovation, including expansion into both ready-to-drink and, importantly, ready-to-eat products.
Sales growth in our ready-to-eat portfolio was in the high single digits this year. This included strong volume-level growth in our Crunchy Cream chocolate spread—think Nutella, but better—and the launch of successful innovations in Thailand, China, and Switzerland, often based on that Crunchy Cream starting point. Moving then across the United States and to Missoula. We're delighted to have become the number one branded cooking oil in the U.S. We took that position three years ago, and we've held it for the last three consecutive years. Our market share now exceeds that of number two and three branded players combined. We've remained well invested in advertising and store activation for Missoula while others have pulled back. Long-term investment in our brand. Missoula's share of voice in the cooking oils category increased from around 50% last year to around 80% in 2025.
It's hardly a surprise that we should be piling on market share as we are. This year, we've launched our new two-gallon format, which targets consumers looking for value. We made good operational progress with reliability and efficiency following heavy investment in our packing plant in Argo in Chicago. There is a headwind, however. Missoula's core consumers are the Hispanic population in the U.S., particularly first-generation immigrants. We've seen those consumers come under pressure and significantly pull back on expenditure. Expenditure amongst Hispanics is well down in the States. We believe and really hope that this effect will be transitory, but it will impact volumes in 2026. I focused on just three of our brands this morning. However, this slide is a reminder that we have a large and diverse set of Grocery businesses across a breadth of markets.
There continued to be a lot of activity across the portfolio in 2025. This shows a small number of examples. We're activating our brand through marketing and in stores. We're growing through different channels, including Amazon, which I think we've really got a grip on now. We're launching new products to meet consumer needs, including convenience and wellness. We're adding new capacity to drive growth and efficiency. Also to note that our Grocery portfolio includes our U.K. bread business, Allied Bakeries. The operating loss this year was a significant drag on overall profitability in the Grocery sector. Clearly, the acquisition of Hovis, subject, of course, to CMA approval and the associated cost synergies, would be very accretive to the profit of our Grocery sector. Moving then to Ingredients. Our Yeast and Bakery Ingredients business, AB Mauri, delivered very good underlying growth this year.
This reflects the breadth of our global reach with sales in more than 100 countries. We remain well positioned in the Americas and Europe in particular, while growing our presence in fast-growing markets in Asia. Our new yeast plant in the north of China should be commissioning in this year. We're leveraging our well-established routes to market for yeast as we expand our portfolio of other products and technologies associated with baking. We're growing our global network also of food scientists and technology centers to develop products to meet changing consumer trends. This includes demand for healthier, more flavorful bakery options. To share an example of that, in the U.K. this year, we've just about commissioned a new production line to make sourdough ingredients through fermentation to supply into the U.K. bakery market. That's AB Mauri.
Turning now to our portfolio of Specialty Ingredient businesses, which overall performed well in 2025, particularly in enzymes and in health and nutrition. We know there's more that we need to tell you about all these businesses. They've been growing well. They're now quite a sizable part of our total Ingredients business. However, to do that any justice would take a lot more time than we have available this morning. I look forward to doing it on another occasion. We're increasingly clear on our strategic priorities for Specialty Ingredients. We know the technologies we want to focus on, the capabilities we want to build on, and the markets we want to service. We know we can't go everywhere, and we can't do everything. More to share with you going forward as we grow in these areas and as we continue to invest in some exciting opportunities.
I expect growth will continue to be both organic and through acquisitions in our Specialty Ingredients portfolio. Sugar. Let me start with Africa, which accounts for close to half of ABF 's Sugar revenue. As you all know, in our African markets, the fundamentals are extremely attractive in terms of population and GDP growth. Sugar consumption traditionally grows faster than GDP. Our businesses are well positioned for the long-term market growth opportunities. We have really good case in the [United] States and factories, and they're both getting better. We have strong market positions and leading retail brands, well-established routes to market for those brands as well. The brand metrics we possess for all our major European sugar brands are ones that any leading FMCG company would absolutely die to have. Tanzania, Zambia, and Malawi are our key growth markets.
I'll note here that Zambia, which this year has been our best of our Sugar business, is listed on the Lusaka Stock Exchange. The most recent market capitalization for Zambia sugar was just over $900 million. We own 75% of that business. In Tanzania, we'll accelerate growth with our new sugar mill. It'll double our capacity in that market, which is just as well because the population is forecast to double by 2050. Tanzania is already a deficit market, and it's going to remain so. We have a strong market position with industrial customers, and we have the leading retail brand, Bwana Sukari. Our new factory, ABF , the Food. Food's largest single investment over the last couple of years, that factory started up last week. In the medium term, we'll expect the return on that investment to be something around 20%.
This is a plant which will still be there in 50 years' time. In Malawi, our business entered into a partnership with part of the World Bank this year to enable investment in infrastructure for water irrigation. Our businesses in a number of parts of our African Sugar businesses are the partner of choice for international and local organizations on development opportunities to drive positive change for local communities and economies where we operate. We benefit from those partnerships significantly. That's Africa. The other half of our Sugar business is in Europe. In 2025, these businesses were loss-making. We need to see a recovery in European sugar prices to get them back into profitability. I'll talk about those dynamics in a moment. Just first, as a reminder of our market positioning, our businesses are in the U.K. and Spain.
They're both deficit markets, and therefore they should, in times of European sugar deficit, trade at a premium to other markets. The U.K. has some additional protection from both the English Channel and from Brexit. British Sugar has built its customer relationships on its product quality, its reliability, and security of supply. These factors support a price premium. Our market share is well over 50% of the U.K. sugar market. Beet prices, though, have been—sorry. British Sugar is also a very low-cost and highly efficient producer. It's at the bottom end of the cost curve among European sugar producers. Beet prices, though, have been too high in the U.K. We negotiated a significantly lower price in this year's campaign. That sugar that's coming out of the ground now. That has given us a cost saving of about GBP 50 million.
We've negotiated already a further reduction in next year's beet price. That is for crop that will go into the ground in March, April of 2026. In our Spanish business, Azucarera, the deterioration in market conditions demonstrated to us what we already know, which was that the cost base in our beet factories was too high. We've significantly reduced our beet manufacturing footprint in northern Spain. We couldn't address that cost inefficiency. We've removed about GBP 20 million of cost and will create other efficiencies as well. Three beet facilities down to one. It's pivoted, and this is the most important point, our Spanish business to cane refining rather than beet processing. In fact, refining has increased from 20% of the business to about 80%. The business becomes a much more back-to-back trading business, which will help reduce the risk and the volatility in Azucarera.
We'll look at other opportunities to further reduce costs in Spain. We believe they are available to us. We're still confident that in time, supply and demand will rebalance in Europe. Price tends to fix price. Beet acreage should continue to come down as beet prices come down, and sugar prices will then improve. We also think that there will be some removal of manufacturing capacity beyond our reduction of capacity in Spain. The market recovery will be slow-paced. It won't happen in 2026. Our European operations are well placed for when it does. To bring all this together on Sugar, the actions we've taken in the last couple of years have fundamentally reshaped ABF's Sugar businesses. We've restructured our business in Spain. We've exited weak businesses in Mozambique and China. We took the decision to close our Vivergo bioethanol plant.
We now have a clear strategic focus within our remaining businesses. In Africa, the growth potential is extremely exciting. In the U.K., British Sugar can compete toe-to-toe on cost with any European competitor. Because this was not the case in Spain, we've changed the game there and shifted our focus to refining. Recent and future capital investment in Sugar is aimed at unlocking the growth opportunities in Africa and also aimed at reducing our energy costs in the U.K. We expect these investments in both parts, in both Africa and Europe, to deliver strong returns. To reinforce the point, this slide shows the pro forma operating profit and return on average capital employed for our remaining Sugar businesses over the five-year period to 2024. If this is what we'd had through that period, these would have been the returns.
It shows that these Sugar businesses generated a sensible profit and a sensible return on investment through the period. We're confident we'll get back to these sorts of levels when the European market recovers. Briefly then on agriculture, where I have sympathy for the teams within AB Agri, some of the very good work done in parts of the businesses was masked by one-off costs. Our joint venture, Frontier, performed very poorly, really due to a combination of exceptional weather impacts. For our Agriculture business, the focus in recent years has been to grow our portfolio of value-added specialty products and services. These continued to grow well in 2025. In particular, Premier Nutrition, another extremely good year, and our enzymes business, AB Vista, performed well as well. We also saw good growth in dairy, where we're making progress with the integration of our full service offer for U.K. dairy farmers.
In summary then, I come back to what I said at the outset. ABF is focused on building brands and businesses that will deliver profitable growth and cash generation over the long term. For Primark, our focus is on driving sustainable like-for-like growth. Profit is holding up well, and the white space opportunities are exciting. Three things I'd say on Food. The first is our international grocery brands have good momentum and are returning to profit growth after a period of elevated reinvestment. Ingredients performance is good, and we believe there's much more to come, especially in Specialty, where we have real clarity of focus. In Sugar, the fundamentals are strong in Africa, and we're well placed when sugar prices recover in Europe. Our balance sheet remains strong on capital expenditure. We're well through the major capital investment cycle for Food.
We've been able to make the right investments in long-term growth while also, though, delivering strong returns to shareholders through dividends and buybacks. I'm confident in the group outlook for 2026, although much depends on the consumer environment, which is particularly unpredictable or miserable at the moment. Looking further ahead, I feel very positive about the group's medium and long-term prospects for growth. Thank you for listening so patiently through what has been quite a long presentation. Before we go on to Q&A, I'd just like to make a couple of points about the review that Michael announced earlier. I'd like to make it clear that what we're currently looking at in this review is either the separation of Primark and Food businesses by way of a demerger or the maintenance of the status quo.
If we do proceed to demerge, I would hope to continue as CEO of the Food businesses. As you know, we're conducting a selection process for a permanent CEO for Primark. Whatever the outcome, the culture, the long-term values, the stewardship of ABF will remain fundamental to the success of our businesses. I want to finish with two important points. Firstly, that we have a fantastic Food business with a highly attractive portfolio, huge potential, and deep global expertise across our people, all of which I look forward to talking about more in the future as it's less well understood than retail. Secondly, Primark has flourished with the ABF structure. In over 60 years, we've created an incredibly strong international brand with a powerful customer proposition. What we're reviewing now in more depth is whether there's a better structure available going forward for these two brilliant businesses.
You'll appreciate, as Michael mentioned, that we can't give you all that much more detail at this stage other than what we've said today. I hope you'll therefore please focus your questions on the results. We look forward to discussing this more in the future when we're in a position to do so. With that hope in mind, may I have the first question? Yes. Yep. Warren. It's in the seat.
It's Warren here at Barclays. I know you're going to want us to talk about the financials, but inevitably, I'm going to grab her. Can you say a little bit more, if possible, George, just in terms of the motivation and kind of timing, I guess, on this? Is it a governance issue? Is it a valuation concern? Is there anything at this stage you can say on tax liabilities, legal disinities? I know it's early stages, but any kind of framing on this? Because I think so long as I've covered the stock, I never really thought it was on the table. Kind of what's changed in your mind? That's the first one. Then I will get on to the actual financials. One for Eoin.
Eoin, are you able to say anything about the kind of investment you're expecting for Primark in 2026 above the line in terms of digital? Because it seems like your margin guidance is slightly lower. I think it was flat, and now it's slightly below flat. Is that because the investment is a bit higher? If so, where is that investment kind of targeted? Finally, just on Sugar, we've been in a big downgrade cycle in Sugar. Do you think we've now troughed on Sugar and beyond 2026? Is there any kind of reason to think there's any long-term erosion in the sugar profitability? Thank you.
On the review briefly, it's about governance. It's about long-term governance. Within that governance headline, I think there are two different issues. The first one is Food, where I think we haven't, quite frankly, been getting the scrutiny from the investment community that would serve us well. Because most of the scrutiny has been about Retail. We want to put that, perhaps we want to put that right. Then on Primark, it's really about oversight of what is now a very big and very complicated business. Maybe there's a better oversight model available to us than the brilliant model that we've been running with for 60 years. You go, "That was 60 years. That worked absolutely fabulously." Now looking into the future, maybe it's time to do something different.
It's a big call. In terms of timing, I would imagine that we would have come to a conclusion about whether to stay together or pull ourselves apart by the interims. The process of actually getting there will, I don't know, take 18 months or so. I don't think we've got anything to say about tax because we haven't been able to investigate these. This is the purpose of the review, is to dig deeply into those sorts of things. We have a private face share case to separate, but we don't have all that detail. Shall I just do the sugar, has anything changed? Whenever you get into these downturns, there's always that kind of bear cage that says, "The world will never go back to where it was." You see the same thing when you get into boom times.
Really, in the end, supply and demand sort themselves out. There are a couple of areas of, they're not so much watch outs, but they are sort of changes going on. The first one, I think we have to accept that GLP-1s are going to take a couple of percent off Food production in Europe and sugar included in that mix. The second one, I used to think that the money that we were, the good returns we made proved selling power. We have two big combined heat and power stations attached to the sugar factories, and we've always done very well selling electricity. I thought that with the growth of renewables, that would erode. With the growth of demand for electricity with AI installations, maybe that demand will not go away.
I think the GLP-1s, you have got to, I think you have got to kind of model maybe. We will lose a couple of percent of volume across Europe.
Yeah. I mean, maybe I will also let Joana square the circle as to what she has been saying in terms of guidance. Just in terms of how we are thinking about the investment, I mean, some of the things I have already spoken about in the presentation. We are probably, I think we are nudging up our digital marketing spend. Not a huge amount year on year, I would say. Most of the kind of, I would say, investment is coming from a combination of investing in price through initiatives like Major Find and also marketing support around those initiatives and other sort of trade initiatives, like, for example, rolling out more performance and so on.
That is where the investment in the margin is coming from. Some of that is funded by, well, actually, I will let you square the circle on guidance. That is how we are thinking about the step-up of investment. Thank you.
Just to really just square that circle. Margin 11.9% for FY 2025, as we know anyway, we had there a one-off of GBP 20 million. What we said is it will be slightly below. It is not the margin that is the leading point. It is the creation of demand. It is all those efficiencies we talked about, foreign exchange being a tailwind, particularly on the first half. We have got some efficiencies, certainly from the work that we have been doing on supply chain. Eoin mentioned what we are doing on the central costs.
The point is those will be used to fuel the drive of top-line growth, which is what we want to focus on first and foremost. Guidance slightly below the 11.7%, which will be the underlying margin for FY 2025.
Adam Sutker at Deutsche Bank. A couple of questions on Primark. Just one little one on the separation, if I may. I will get that one out of the way. In terms of, can we just confirm that both the Food business and Primark, on a cash flow basis, are cash flow profitable and can fund their own investments? That is the only one on the separation. Great. Thanks. In terms of Primark itself, the marketing spend, something we have been waiting for for a while to reinvigorate the brand. You have done it in a few different markets.
Can you just talk a little bit more about what success you have had with the marketing spend? Most importantly, how are you managing the message between fashionability and price? Some of your advertising campaigns, I thought they look very trendy, fashion-led rather than price-led. Is that something that you are going to rebalance going forward? And then. The franchise opportunity in the Gulf, can you just talk a little bit more about what that looks like? Is it a model that can be expanded beyond the Gulf, or is it something quite specific to the Gulf? Thanks.
Yeah, look, I think. It's a mixed bag, I would say, on marketing spend. I'd just have to be kind of honest with that.
I think you're probably right to say that there has been a little bit too much on the fashion side of representation of the brand and probably maybe not enough on price. I was interested when I was in Germany that when looking at our brand campaign, it was very hard to see the price, actually. Fundamentally, we're a value disruptor, and then we've got to remind people of that all the time. I think there probably is a little bit more balance we have to get there. That's the classic challenge of a value operator. It's how do you kind of project the quality of the products, but at the same time, remind people of the unbelievable price? I think that's what we've just got to do more and more of.
I think there were elements of indemn we can, which showed that a lot of the coverage we got was actually about the unbelievable prices we had. I agree that the top-line advertising looked a little bit too fashiony. Yeah, more to do. I think it's fair to say the brand metrics, as I said in the presentation, that we've seen in the States are encouraging awareness. I mean, we only did it in the New York area. It's only in the New York area where we've had those sort of kind of benefits. Look. We've got a great brand. We've got a great set of products. We've got to sharpen our comms. I think that's the message. I think franchise is a significant opportunity beyond the Gulf, actually. I think the Gulf is proving what the model can do.
The Gulf is probably the most tried and trusted franchise market in the world. We just have to—you don't have to be—don't want to be naive to know that this is where a lot of people do relatively well. Our brand is definitely resonating. It's very exciting. We've loads of opportunities in all the Gulf States, actually. I wouldn't—we started in Kuwait because our partner is based in Kuwait. Obviously, we've got plenty of other opportunity outside of Kuwait. That's going to be the focus for the next period of time. It does open up the opportunity. For sure, it does open up the opportunity. It's about getting good partners. If you can get good partners in different regions, I think there's some real opportunity in the future.
Okay.
T hank you. Richard Chamberlain, RBC. Three for me, please. Just one on Primark.
What are the plans now for the Click & Collect offer? Now it has been fully rolled out to the U.K. Are you planning to take that to other markets in due course? Second, on the Sugar profit guidance, I think you guys are looking now for a small profit in fiscal 2026. How much of that improvement from the loss, I guess, in the last year will come from lower B costs? I seem to remember you saying it was, I think, GBP 50 million or something before. Is that guidance still valid? Then I guess on the proposed separation, any early thoughts, George, about sort of amount of financial leverage that the food or the standalone Food business could support? I mean, presumably, it could theoretically take on some significant on-balance sheet debt in future. Is that going to be the plan, or too early to say? Thank you.
Yeah, I do think relatively quickly. I mean, I think, look, the U.K., we obviously did a lot of testing in the U.K., right? In that time, we obviously developed a capability, and so that is good. As I said in the presentation, the metrics, financial metrics, and the customer metrics are very compelling. It is fair to say. We will be rolling it out into other countries, but the timing might take a bit of time. There are some supply chain fixes we need to have, a kind of more kind of sustainable, repeatable Click & Collect and online model. We have a bit more to do on that. Actually, in some ways, I do not think we are in any way defensive of the time we have taken to get where we have got to on Click & Collect.
We have had to work it through and get the model right, and we will take our time in other markets as well. On Sugar, the total B cost this year will be GBP 50 million less than the total B cost last year, but the average selling price will be lower, and we will offset all of that, just about. We have multi-year deals across a chunk of our volume. This year, actually, year on year, the price has gone up slightly, but more of the high-priced contracts have rolled off. That is what is going on in U.K. [in AB]. I am tempted to say we cannot tell you anything about kind of leverage ratios and stuff like this in a business that we have not decided to create yet, so perhaps I will stop there.
I just remind you that the same majority shareholder is going to be in the same position in both, and you can look back, I think, about how any majority shareholder thinks about leverage. Yep, Will.
Good morning. The first one is also on the separation, but it should be quick. I think it is pretty clear, but is it the case that you are only looking at the two options, i.e., a demerger and m aintaining the status quo? There's no other strategic review of specific segments or anything like that? Great. The second question is on Primark margin. I just wanted to clarify. What are the moving parts? Is it mostly going into gross margin, or is it going into OpEx?
And within that, do you think there's room to move on price, whether that's price mix, the hero products that you mentioned with [Wow], products at [Wow] prices, etc.? Do you think there's movement on price? And then the final question is just on the cash return. Obviously, there's some volatility in the buyback over the last few years now. In hindsight, do you think it would have been better to stay at a GBP 450 million run rate and deliver consistent cash return, or do you think you will follow basically earnings and the cash flow going forward? Thanks.
One and then Joana, do you want to talk about the.
I can talk about the margin as well.
Yeah. Let me talk about the margin as well.
So the margin tailwinds, they're both the gross margin level and operational efficiencies as well. We've talked about the move on some of the central functions into our [GBS]. But we also have got some efficiencies on the supply chain. On stores, the stores are still driving some of those efficiencies. FX is going into the gross margin. So there are different components, both in terms of the gross margin and the operational margin. But as we said before, it is not about the margin. It is how we use those to drive the top line.
Room on price. I mean, I think we're not going to invest in price just for the sake of investing in price, right? I think you have to be quite targeted of where you're going to invest in price. I think we will, over the next 24 months, invest in price. Sorry, give me 24 months to give us to not be a guidance point. But it needs to be targeted. It needs to be focused.
Sorry. As I said, it's a [Wow] product. So there are some products that—sorry, just before. The cash returns and the volatility in the share buyback. I think our capital allocation policy is quite clear. If we've got enough cash, then we will look at distributing some of that. So having a GBP 450 million doesn't tie in with our capital allocation policy. We had less cash at the end of this year than we had at the prior year. GBP 250 million feels right, even though we were at one times.
Yep. Hi, Geoff Lowery, Rothschild & Co Redburn. Can you just step back about Primark for a minute and help us understand what has sort of sat behind the slightly lackluster LFL? Is this items into basket? Is this footfall? Is this particular categories? And you've drawn a distinction between price and price perception, which is a really interesting one. Which of those is the bigger issue in terms of what your data says about the business? I guess that plays into the sort of ultimate question here, which is your margin has mostly recovered to pre-COVID type levels. The sales densities nominal have been under some pressure. Is that the right shape, do you think, over time for a discount or a price-led strategy with your evolving geographic mix? Thank you.
Lots in that question. I think it's a bit of all, actually, in terms of what has been impacting like-for-like. Baskets have been tough. I think pretty much across all markets. Where we've seen creeping ASP through price, it's been offset by units per transaction, which means that consumers have sort of capped out their spend level. We've definitely seen that.
Some of that's been a bit more extreme in the countries where it's been tougher, right? I think footfall has also been a bit of a challenge in certain parts, in certain places. Again, it's been a bit about—I think there's lots of factors to that. Some of that's the market. Some of that's our positioning into the marketplace. I think we've had some headwinds on categories. Last year, particularly the lifestyle categories have been tricky. I think women's wear, up until kind of more recently, has been tricky as well. I think it's been a bit of everything. That would kind of suggest that it's kind of market and us, right? I'm trying to focus on what we can control. As I said before, I still believe we've got the right proposition. Just how we execute and communicate against it is going to be key.
I think that's a really good—I mean, that's a tough question. I think because the answer, I think, is nuanced by market. This is where I think we've also got to get a little bit better as to sort of how we're deploying our approach by market. I mean, the U.K. is obviously our most mature market. You always have your frame of reference around that. I think, actually, we can continue to be more price-led, I think, in certain other markets. We've still got quite a lot of operating leverage to go after. I think I have to be a bit more kind of nuanced in terms of my answer and be a bit more kind of—we have to understand exactly how best to win in each of the markets that we operate in. I still think we can.
There are certain markets that are just going to be tough, like Germany. We've talked about Germany before. It's not going to be a big future for near-term future. It might be in the medium to long term, but it's not a big near-term future. That being said, we're opening up our. First store in Germany for the first time in a couple of weeks' time. I am going there because we still believe in the future of the market, but it is a tough market. Anyway, it is a long answer to a very interesting question. Hopefully, that helps.
Thank you. Clive Black from Shore Capital. A couple if I may. Firstly, on Food, notwithstanding the separation. Is there any parts of the assortment or the portfolio that you still feel need some care and attention after the busy year you have just had? Then around future CapEx.
Firstly, you made a fantastic statement about plants returning in 50 years. We will be six feet under well before that. In terms of returns on your Food investments, what thresholds are you looking for in that respect? Maybe highlight some of the big projects for the current year. The reason I ask that is you said you have gone through quite a hump of Food investment, but still, the group is looking at GBP 1.2 billion of CapEx or thereabouts. Lastly, just on Primark, how do you characterize the USA in terms of its maturity profile? Some years ago, this was the sex and violence of ABF. Where do you see the states today for the business? Thank you.
I do not think we are betraying too many secrets in saying that we sign off CapEx projects at a minimum of 15% year three. That is only the start. We then start to ask whether we believe it. Look, I mean, we know in some of these very big projects that to get to settled state, output can take a while. Really, what we have been looking at in all these projects is long-term competitive position. It is why I talk about 50 years. It is why we would not have done Tanzania if it had not been for the brand metrics supporting that. Similarly, Australia's developments are on the back of positions that we have already got. Where do we head? Portfolio. Look. I do not want to just talk about the bad stuff. I want to talk about the good stuff too.
I really would love to have a longer session with a group of fellow-minded people about the potential for Primark or our enzyme business or the health position or what we think we can do with Ovaltine over the years. There is so much there that I think is underappreciated. Yeah. Look, there are always problems. We have lost a major account, as you all know, in our animal feed business. We will get on and do something about that. Really, I think the better use of all our time is accelerating the growing bits, the attractive bits, and making sure that you kind of prevent bad stuff from happening again. Yeah, of course, we have had to take some action on things like the Vivergo on Spanish sugar. Really, the future of the Food group is about growing the lovely bits.
Much more than it is about fixing the last few kind of headaches that will come to fruition. We'll have the capacity expansion in yeast extracts. That's really good. We'll have the yeast plant in Northern India. The market is oversupplied at the moment, so we won't get an immediate return off that. We'll get the flour mill in Western Australia—sorry, in Victoria—complete. That will reduce our costs there and solidify our position in the Victorian market. We'll be a long way through the capacity expansion at World Food's Polish site. We'll have the sourdough plant up and running quite soon. We'll have the blending plant at Enzymes done by January. What have I missed out with the cross Food? Ovaltine Nigeria. We have the most fantastic Ovaltine business, obviously, in Switzerland. The bee's wish is to eat Ovaltine in all its manifestations.
The population of Switzerland, I think, is 11 million, which means that the Nigerian population grows by Switzerland every 15 months. And we have really good brand awareness in Nigeria, but we've never had a cost base to really access that market because we've been importing product tariff-paid out of China. That's an exciting one.
You've actually—
We've had the sex and violence.
Sex and violence. Yeah. Sex and violence. Yeah. I think. As I said, there's a lot going on in the U.S. I mean, we are 33 stores. I think for a maturity level in the U.S., that's pretty immature for a market the size of the U.S. Although we've been there 10 years, with COVID flat bang in the middle of that. I think this year is going to be an important year. We're going to open up more than 10 stores, including Manhattan.
We're going to do a little bit more brand marketing as well, particularly in the New York area, to support that. There's obviously a huge amount of noise in the marketplace going on at the moment. We have to kind of see how that all settles down. I hope it does. I mean, that's still really early days. I would. You'd like to think in a kind of a U.S. growth plan. We're not going to do anything stupid either. We've been kind of thoughtful. We've made some mistakes. We've learned from the mistakes. We're making money. We've still got to be pretty kind of thoughtful as to how we expand. It could take another 10 years to get to maturity. I still think the proposition works well there if we can kind of get the awareness in the right way. Richard. Richard? Sorry. Sorry. Bigger voice. Yeah. Sorry.
Is that working? Yeah. It's Monique Pollard from Citi. I have three questions, if I can, they're all on Primark. The first one, Eoin. Given your focus on the price investments being very targeted and specific, I was just interested in sort of how you think about the overall price landscape and whether or not you benchmark to second-hand clothing platforms like Vinted as well when you're thinking about that price proposition now, given the rise of those platforms. The second question was just whether you had any views at all on the potential for the closing of the de minimis loophole in the U.K. budget. And what benefit that could potentially bring to the competitive landscape in the U.K. overall. The final question was just on second-half U.K. trading. Obviously, a massive improvement there.
You've mentioned a lot of the focus you've put into the customer value proposition driving that. Just wondered if you had any views on whether the competitive landscape, so M&S and the cyber issues that have been well understood, had had any benefit there or were there benefits, etc. Just trying to understand sort of how much you think was external factors versus your own internal. Thank you.
Do you want to do one and three, and I'll do two? Yeah. Yeah. The overall pricing landscape, I mean, it is interesting, actually. We haven't changed our pricing that much this year. To reduce pricing to make sure we're still at the lowest entry price point. That's demonstrating that it's not a very competitive market from a pricing perspective. We don't benchmark to the second-hand market. Maybe we should, but I think it is quite a different market.
I mean, we look at it quite a lot, but we don't benchmark to it. A lot of the product on Vinted in the U.K. is Primark. It's going to be hard for us to benchmark to that one. The pricing has been more competitive, I would say, in Europe. That's, I think that's where we see more kind of pricing pressure. In H2 in the U.K., I think I'm going to be a bit more bullish and say it's all to do with us rather than to do with the—it's always to do with the external market, but the impact of M&S was more a switch between M&S and Next than it was elsewhere. I think we've just executed better. De minimis. Gee, we had hoped to see some actions taken in the budget. The Europeans have a well on the way to closing loopholes.
The Americans have done it. We've been working very hard to provide the Treasury with information about the value-add of High Street versus the value-add of this method of trading. I'd also point out that given the closure of parts of the U.S. market, the rest of the world is getting a lot of pressure out of Chinese manufacturers. We really should be taking steps to preserve our own position. I hope so. But until we see the budget. It's likely to be one of—sorry, if it came through, it'd be one nice thing out of the budget amongst a bunch of things that perhaps were not. Cyber. To you. Market expenses.
Sorry. Yeah. Warwick. Sorry. [Monique] Warwick Okines, BNP Paribas. Actually, similar question to Monique's, but looking at Europe. Eoin, in particular, I was wondering if you could just reflect on the sharp decline in like-for-likes in the second half in Europe. How much of that do you think was you versus the market? Was there a particular change in cannibalization effects or deliberate cannibalization effects in H2? And what does that mean for European like-for-likes looking forward?
Yeah. Look, I think most markets in Europe are feeling the pinch. I mean, if you look at all the metrics about European clothing markets, they are all struggling. Sorry, high-level market level. I think they are all competitive, right? It's not like there is a sort of a new competitive kind of theme in European markets. They are all competitive. I think we've had a bit of cannibalization. I think you probably would have quantified the kind of a quarter of the impact is that.
I know you do not want me to hear this or say this, but there have been some wetter impacts in some, particularly Iberia. Quite struggled in the second half of the year. I think places like France, I think, have become more competitive, actually. Back to my prior side, not more competitive. I think they are very competitive and are a bit tougher, particularly in this kind of tougher environment. It is a bit of everything, to be honest. I have to be—it is a bit of everything. It just goes back to the same thing again. We just have to execute well. The proposition is good. We have to execute well. I think European markets are going to just take a little bit longer to recover.
Good afternoon. Thank you. It's [Rizal Mankali] from UBS. Just to build on the couple of questions earlier, maybe on Primark again, sort of three questions, I guess. The U.K. is where you spent a lot of time. I think you have talked to a lot of initiatives to reinvigorate Primark there. Does it give you confidence you can actually now see sustained positive like-for-likes in the U.K. over the coming year, two years sort of time period? Or otherwise, what should we be looking for in the U.K. as a proof of the effort you are making continuing to deliver? That is the first one. The second one, I think you have talked about cost optimization. Clearly, you are also talking about investment for growth. I guess the question is, at Primark level, sustained growth in like-for-like terms means what in terms of operating margin?
Is a mid-level sort of margin consistent with healthily growing like-for-likes in the business? How should we think about it? Again, third one, also on Primark, is the medium-term CapEx what we have just seen today, GBP 497 million, GBP 500 million, something that we have seen today? Is that a good run rate to think about for Primark CapEx?
All good questions. I think U.K. like-for-like—well, I think you should measure us on U.K. like-for-like. Look, I think there is a lot still to go after in the U.K. I do not—I am still kind of optimistic about where we can go in the U.K. We have only just rolled out Click & Collect. All of the initiatives that I talked about here, there is more to come from—there is more to come in all the initiatives that we talked about, performance where more coordination, etc.
I think we can—we should be trying to aspire to get to more sustainable like-for-likes in the U.K. We have still got—I mean, our brand is phenomenal in the U.K., the brand awareness, the consideration, all that sort of thing. There is still a lot to go after. I think margin—I think we would say around these levels. I do not think it is around these levels feels we can kind of make the model work for sustainable like-for-likes. We always have said before, which we still believe, is that the margin is the outcome. The strategy is to drive the like-for-likes. Around these levels feels right. Then CapEx, yeah, I think the similar levels. I think similar levels. Although there is sort of franchise, obviously, is quite a capital efficient way of expanding. There might be a bit of give from that.
I think was—but I think the take might be more investment in digital. I think that similar levels is probably okay for now. I think the depo spend will be similar, yeah, too for a little while. Yeah. Some of that is actually also to support digital as well.
We will see the decrease side where we hit the bar wave. This year is still same levels and then starting to go down slightly.
Thank you. Is there anyone online? Nope. There is no one online. No one allowed to be. Thank you all very much for coming. We have got some pressees for you all by way of thanks, little bribe. If not before, we will see you next year. In the meantime, it is a bit early to say Happy Christmas, but we are getting there. Thanks a lot.
Thank you.