DAVY VIEW

We are lowering our FY26 and FY27 adjusted operating profit forecasts by c.5% and c.11% respectively, primarily reflecting further weakness in Sugar; in aggregate, we have reduced our FY26 profit forecasts by c.26% over the last 12 months. While we believe this is reflected in the valuation, visibility on a sustained recovery in earnings momentum remains limited. The proposed demerger of Primark is strategically coherent but does little to alter this near-term dynamic given the extended lead time and limited disclosure on the standalone businesses. In this report, we provide an initial assessment of Primark as a separate entity. The financial profile appears solid, but a clearer articulation of growth, reinvestment and returns will be required to establish a more compelling standalone equity narrative.