Restructuring costs and margin declines at Allied Bakeries have contributed to a decline in adjusted operating profit for Associated British Foods (ABF).
The firm said the market remained “intensively competitive”, with promotional activity reducing margins at Allied and rising wheat costs adding to the pressure.
Its yeast and bakery ingredients business AB Mauri has also seen restructuring costs hit operating profit, although revenues remain steady.
ABF said its overall adjusted operating profit for the second half of the year will be substantially ahead of 2011, as sugar boosts revenues.
The firm said the revenue from its sugar business was well ahead of last year, reflecting the strong commercial enivronment in Europe “and to a lesser degree Africa”. In China, however, prices have continued to fall in H2 with revenues from the region lower as a result.
British Sugar’s profits will also be up on last year, put in part down to the absence of weather-related challenges.
In July, ABF completed its acquisition of ethnic flour brand Elephant Atta, from Premier Foods, for a consideration of £34m, with regulatory approval granted on 6 September.
The group issued the pre-closing trading statement yesterday (10 September) as it entered the close period for its full year results, due to be released on 6 November.