Associated British Foods was upbeat about its UK bakery, sugar, ingredients and cereals businesses as it posted a trading update this morning, with underlying profit said to be “ahead of expectations”.

The global giant said that against a background of retailers continuing to discount bread heavily, revenue at Allied Bakeries had held up well in the past year, driven by a substantial increase in volumes.   

And the continuing success of Kingsmill Sandwich Thins saw investment in a second production line which came on stream in April, it said. 

Meanwhile, ABF sugar brand Silver Spoon gained new contracts and benefited from a relaunch this summer but low retail sugar prices maintained the pressure on its margins. 

Wider distribution and a targeted home-baking marketing campaign drove an increase in its Billington’s brand’s revenues and the Allinson brand maintained its position as the UK’s leading bread flour brand, it said. 

The full integration of Dorset Cereals with Jordans and Ryvita had delivered the “expected savings” in operations in the UK.

AB Mauri, ABF’s bakery ingredients and yeast business, delivered a third year of “significant profit recovery” from all regions. 

A key driver of the development of the business was the recent investment in the US and UK Centres of Excellence and the expansion of the bakery ingredients R&D centre in the Netherlands which will be completed next year, the company reported.

ABF posted the update prior to entering the close period before its full year results. Its results for the 53 weeks to 17 September 2016 are scheduled to be announced on 8 November 2016.

The underlying operating performance of the ABF group was ahead of expectations in the second half and the further weakening of sterling during the period since the EU referendum has resulted in a translation benefit, it said.  Operating profit for the group will be ahead of last year. 

If current sterling exchange rates continue they will have both positive and negative effects on the group’s operating profit next year, it added.  The impact on the profit margin on Primark’s UK sales would be adverse, but British Sugar’s would benefit.