Allied Bakeries and AB Mauri owner ABF has reported double-digit revenue growth for the first half of its financial year, although margins were hit by slow inflation recovery.
Sales for its food business grew by 17% to £5.3bn and adjusted operating profit increased by 4% to £373m at constant currency for the 24 weeks ended 4 March 2023.
Within this, the ingredients division performed ‘particularly strongly’ and adjusted operating profit rose by 48% at constant currency to £102m. This, ABF said, was mainly driven by good cost recovery and resilient volumes at yeast and bakery ingredients business AB Mauri. ABF Ingredients also had a ‘strong period’ but profits declined in sugar as adverse weather conditions damaged UK beet crop.
Looking more closely at grocery, revenue was 10% higher than the same period last year (£2.1bn compared to £1.82bn) with prices increasing to recover cost inflation. However, adjusted operating profit fell by 10% in constant currency to £173m due to the lag between input cost inflation and the time it takes to agree and implement price increases.
Results at Allied Bakeries – which includes Kingsmill, Allinson’s and Sunblest – also improved after the business secured significant pricing. ABF described this trajectory as ‘encouraging’ with financial performance improving throughout the period. As such, it expects to see further improvement in the second half. Notably, Kingsmill ventured into the premium bread market in the period with a Great White Bloomer with Sourdough and a Malted Bloomer (pictured above).
Further shake up to Allied Bakeries’ portfolio came after the business confirmed it had stopped production of the Bürgen brand to focus on core volume lines to maximise production efficiency.
“This period was marked by extreme and volatile inflation in all our businesses,” said George Weston, chief executive of Associated British Foods. “We have taken considerable action to mitigate these costs through operational cost savings and, where appropriate, pricing.”
Looking ahead to the full year, adjusted operating profit at the food business is expected to be modestly ahead of last year, although profits at the ingredients division are likely to be ‘well ahead’.
No comments yet