Associated British Food, the conglomerate behind Allied Bakeries, said yesterday its bread division had made “significant progress” in the past year – thanks to volume growth and reducing costs.

However, the company, which unveiled its annual results for the year to 14 September 2013, added: “The UK bakery market remains intensely competitive and there was some pressure on margins.”

Overall the company, which also runs the fashion chain Primark, saw its revenue increase by 9% to £13.3bn, with it adjusted profit before tax also increasing by 13% to £1.09bn.

Revenue in its grocery division, which includes its Allied Bakeries business, increased 3% from £3.7bn to £3.8bn. Its adjusted operating profit increased from £187m to £232m.

In the annual statement, Allied Bakeries said: “A combination of organic volume growth and the new Co-op supply contract, which commenced in April this year, drove an increase in market share and established Kingsmill as the number two bread brand in the UK.

“Allinson bread benefited from advertising investment, which saw the brand back on television for the first time in 10 years, and Allinson Wholemeal regained its position as the number one brand in the Premium Wholemeal segment. We continued our capital investment programme to upgrade and modernise the bakeries.”

In the past year its new Stockport bakery came on-stream in September 2012 and, in April, it opened a new bread line at Walthamstow. Work is due to start at its West Bromwich bakery shortly.