Allied Bakeries and AB Mauri owner ABF has said it expects group sales to be up more than 20% year on year.
In a half-year trading update the business reported that it expected adjusted operating profit in line with the same period last year, and that it continued to encounter cost pressures.
ABF said its food businesses were continuing to seek to recover inflation through cost mitigation and price increases and that it expected operating profit to be higher than last year, although margins would be lower.
Kingsmill brand owner Allied Bakeries had secured price increases and volumes had been resilient, reported ABF, adding that inflationary pressures remain. Allied Bakeries last year confirmed that it had stopped production of the Bürgen brand to focus on “core volume lines to maximise production efficiency”.
ABF’s Tip Top baking business in Australia had traded well but had faced inflationary pressures, particularly high bread wheat prices due to the wet Australian harvest.
ABF said total half-year revenue from the company’s grocery businesses, which includes Allied Bakeries, is expected to be 10% higher than last year as price increases continued to build to recover cost inflation.
The company reported a strong performance from its ingredients division, and that it expected margin and adjusted operating profit to be higher than last year.
AB Mauri exceeded expectation, said ABF, with price rises to recover input cost inflation and good volume growth expected to deliver stronger revenue growth. The company added that specialty ingredients business ABF Ingredients had continued to trade strongly.
Revenue from the AB Sugar business is expected to be 26% higher than the same period last year due to higher sugar prices in Africa and Europe and an increase in bioethanol sales.
European sugar prices continued to increase as a result of lower European sugar production, with estimates for EU production in 2022/23 10% lower than last year due to adverse weather and a smaller growing area. UK sugar production for 2022/23 is expected to be 0.74 million tonnes, down from 1.03 million tonnes.
Looking ahead to the full year, ABF said adjusted operating profit and adjusted earnings per share are expected to be broadly in line with the previous financial year.
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