Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

Sweeter sugar. Poorer Primark. That's the opposite of what the market has come to expect from Associated British Foods.

This time around it was the British conglomerate's sugar division that shone like a silver teaspoon, not its cut-price fashion chain. It made an operating profit of 6 million pounds ($8.6 million) in the six months to February 27, reversing a 3 million pound loss last time. The division was helped in the first half by tighter stocks in the global sugar market and lower costs. At last, prices in the European market are starting to rise.

Improvement in the sugar division is badly needed. It has seen its profit dissolve from 35 per cent of ABF's total in 2013, to just 4 per cent in the year to September 2015. It's all down to the end of EU sugar sales quotas in September 2017, which has forced producers to fight for big contracts.

Sugar Rush
AB Foods has comfortably out-performed the FTSE 100 over the past year
Source: Bloomberg

ABF believes sugar has bottomed. It forecasts significantly higher profit for the division next year.

In contrast, operating profit at group superstar Primark went backwards, to 313 million pounds in the six months to February 27, from 322 million last time. That's primarily down to sterling's weakness against the dollar. Primark sources almost all its products from suppliers in China and south Asia. It pays in dollars, so the strength of the greenback makes that more expensive.

Still, the drop was less than expected because Primark made the most of lower input costs elsewhere, in cotton, oil and freight rates, to offset the dollar strength.

Primark sales from stores open at least a year also fell in the first half, although by less than 1 percent. Still, Bernstein analysts estimate this is its first reduction in same-store sales since they started tracking them in 2004.

It would be tempting to think we've reached peak Primark, with sugar starting a comeback. But that would be a mistake. True, the outlook for sugar is better than for some time. But Primark, accounting for 42 percent of sales and almost 60 percent of operating profit in the year to September 2015, remains the driver of ABF's fortunes.

Shrinking Sugar
Sugar has become a much smaller percentage of Associated British Foods' operating profit
Source: Bloomberg

The U.K. market is tough, but continental Europe and -- most crucially -- the U.S. are performing well. Primark has been well received in the U.S., ABF says, even though Americans don't like its flannel pajamas and U.S. men prefer black and white boxer shorts to other colors and patterns.

As Gadfly has argued, while ABF's management has done a pretty good job in steering its disparate collection of businesses, a split between Primark and the food arm would unlock value.

Much of the rationale would be to give Primark a higher rating because of its strong potential in the U.S. It trades at a similar level to Zara-owner Inditex when looking at 2018 earnings, but would warrant a stand-alone premium because of those U.S. hopes.

The turnaround in sugar lends weight to the break-up argument. ABF's sugar, grocery and agriculture divisions are on a similar multiple to the broader packaged foods industry. With the prospect of a profit rebound in sugar, there's potential to push that higher. All the more reason for ABF to ditch the conglomerate structure.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Andrea Felsted in London at

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James Boxell at