Performance in Sugar continues to shows signs of stabilisation but some headwinds are gathering in the Retail business, owing to FX. The full year outlook is unchanged with adj. EPS expected to be flat. The details: Primark Full year sales are expected to be +4% (Q3 YTD: +4% (cc), H1: +4.4% (cc)), with LfLs of -2% (H1 LfLs: -1.5%, Q3: “Negative”) versus consensus expectations for full year LfLs of -1.8%. Sales in Q4 are said to be “positive”. Across the regions, UK full year LfL sales are -1% (H1 LfL: +0.6%.) implying H2 LfLs in the UK were -2.5%. Performance in H2 was impacted by unseasonable weather in May (as reported in Q3). Likewise in Europe, H2 performance also remains soft with full year LfLs down -3% (H1 -3.2%). Performance was once again weak in Germany, but strong in Italy and Spain. In line with positive trends reported at Q3, the US appears to be performing well with LfL growth and lower operating costs expected to reduce US operating losses. Full year operating margins (at Primark) are expected to be “ahead” (consensus: +70bps); this implies, as expected (owing to FX), H2 operating margins will be –50bps, given +190bps of improvement in H1. Looking forward, given current sterling rates, management now expects operating margins to “reduce” versus consensus expectations for +20bps of improvement. Elsewhere, Retail selling space increased by 5% YoY and for next year the company expects to open 1m sq ft of space - broadly in line with our expectations (0.9m sq ft). The details: Sugar, Grocery, Agriculture, Ingredients Full year sales and profits for Sugar are expected to be down, following H1’s -11% sales performance and management’s full year outlook is unchanged. Performance in H2 therefore appears to be stabilising. EU stock levels have tightened during 2018/19 and management believes stock levels will remain low going forward, underpinning spot EU sugar prices. We note consensus expects only modest sales growth in FY20 (c. +3%). Elsewhere, the Grocery, Ingredients and Agriculture business all appear to be performing in line. Our view Whilst we acknowledge earnings momentum is improving in Sugar, headwinds in the form of currency (at Primark) could start to create a drag on earnings going forward. The valuation, on 15.5x FY20E PE still seems demanding for earnings growth of 9% (EPS 2 year CAGR FY19E – FY21E). We retain our Hold recommendation