Associated British Foods (ABF) is ‘evaluating strategic options’ for Allied Bakeries as losses deepen.
Allied Bakeries – which includes Kingsmill, Allinson’s, and Sunblest brands as well as own label manufacturer Speedibake – continues to face a ‘very challenging market’, ABF said in its interim results for the 24 weeks ended 1 March 2025. Although it didn’t provide figures for the bakery division, it confirmed operating losses had increased.
“Our UK-focused businesses declined overall,” ABF stated. “As expected, this was primarily due to lower volumes and sales in Allied Bakeries, which resulted in an increased operating loss. Allied Bakeries continues to face a very challenging market. We are evaluating strategic options for Allied Bakeries against this backdrop and we expect to provide an update in H2 2025.”
Some positive news from bakery came as the firm completed the installation of a manufacturing line to produce Scrocchiarella bakery products in Bradford and accelerate growth in foodservice.
Sales for ABF’s grocery division fell 2% to £2,089m (based on actual currency) although it was relatively static based on actual currency. Adjusted operating profit increased 1% to £227m and adjusted operating margin increased to 10.9%.
Most of ABF’s leading international brands and regionally focussed businesses performed well, it said, underpinned by ‘strong investment in effective marketing and excellent commercial execution’.
Ingredients – wins and losses
There was a mixed picture from ABF’s ingredients businesses. Sales of its ingredients division grew 2%, primarily driven by yeast and bakery ingredients business AB Mauri. Adjusted operating profit for the division increased by 8% and adjusted operating margin increased to 11.6% reflecting ‘good management of input costs’.
Things were not so sweet in the sugar. Persistent low European sugar prices and an operating loss in UK bioethanol business, Vivergo, impacted overall profitability in 2025. Challenges in Tanzania, due to the overhang of high levels of sugar imports in 2024, and in South Africa, due to drought, are also impacting performance, ABF said.
As such, it is not expecting the sugar business to have an adjusted operating loss of up to £40m in this financial year. The interim results placed losses for the first half at £16m – a significant decline from the £125m adjusted operating profit seeing in the comparative period the year prior.
“I am frustrated with the results in our Sugar business, but we are clear on what needs to be done by way of operational and regulatory solutions to improve financial performance,” ABF CEO George Weston said. “Looking ahead, in an operating environment with significant uncertainties, the Group remains well positioned and our strong balance sheet enables continued investment to deliver long-term sustainable growth.”
Overall group revenue for the 24-week period was £9.5bn with growth in retail (which includes Primark) and ingredients offset by a decline in sugar and agriculture divisions. ABF generated an adjusted operating profit of £835m, a decrease of 12% at actual rates.
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