Davy Morning Equity Briefing
Jul 01, 2026
Associated British Foods
Q3 trading update: Sugar profit warning, Primark guidance held
Primark delivered a like-for-like (LFL) decline of 2.2% (Visible Alpha (VA) consensus: -3.7%), with the drag led by Continental Europe and UK/Ireland broadly flat (H1: +1.3%). Management has maintained its FY26 Primark guidance, holding margin at c.10% despite impacts from the Middle East conflict. On Sugar, management now expects the knock-on impacts of the conflict to weigh on procurement costs, guiding to a loss of £25-60m in FY26 (VA consensus: -£22.5m) and a >£60m loss in FY27 (VA consensus: flat). As such, we see downside to our current forecasts.
Irish economy
Inflation moderated in June despite services acceleration
June’s flash inflation reading was 3.3% in annual terms, above our forecast of 3.1% but still a moderation from 3.5% in May and 3.6% in the previous two months. Energy prices declined less than we expected, but food prices were also negative. However, core inflation accelerated as a result of seasonally strong price growth for services. Looking ahead, while inflation could rise higher towards the autumn months, a return towards 2% core inflation by next summer is achievable. While further European Central Bank (ECB) deposit rate hikes are still priced in for September or October, lower energy prices could render the recent 25bp increase sufficient to restore euro area inflation to target next year.
