Associated British Foods, the group behind Kingsmill, has announced that group revenue is down 2% to £6.2bn in the 24 weeks to 1 March, due to food commodity deflation.

It revealed in its interim report that revenue in its food business was lower than last year, with sugar prices being a major cause. However, Allied Bakeries made progress in the UK bread market, with volumes and margins both ahead of last year.

The Kingsmill 50/50 range continued to be the main stimulus of growth, while the smaller Allinson brand also made “significant gains”. Both brands had received television advertising support during the period.

A new bread plant was commissioned at West Bromwich as the company approached the end of a major capital investment programme in its UK bakeries. The programme aims to deliver less waste, better control of processes, consistently high-quality bread and lower energy usage.

The report also revealed that adjusted operating profit was up 1% at £497m, adjusted profit before tax was up 4% at £468m and adjusted earnings per share were up 10% at 45.8p.

Shares lifted

Meanwhile, dividend per share was up 4% to 9.7p, net debt was £827m after net capital investment of £328m and operating profit rose 2% to £463m. Profit before tax was up 6% at £434m and basic earnings per share were up 12% to 43.2p.

George Weston, chief executive of Associated British Foods, said: “The group as a whole has delivered a very resilient operational and financial result at a challenging time of transition for our European sugar business.

“I am pleased to report interim results for the group that deliver adjusted earnings growth of 10% in the face of a strengthening of sterling and much lower sugar prices.”