Associated British Foods said its Allied Bakeries division had seen "a very disappointing year", as it posted preliminary results for the year ended 16 September this week.
There were revenue declines in Kingsmill and own label, and profitability declined sharply. The new management team has developed plans for the reinvigoration of the brand, it said. But with the need for brand investment, no imme diate improvements in profitability should be expected in 2007.
The last year had seen "major long-term developments for the group", chief executive George Weston said.
But although there were satisfactory advances in several businesses, they were offset by the £34m impact of sugar regime reform and a £64m increase in energy costs, most of which could not be recovered in pricing.
Chairman Martin Adamson said British Sugar has responded to the fundamental changes in the EU sugar regime with initiatives to reposition the business for growth.
The acquisition of 51% of Illovo Sugar Limited, based in southern Africa, provided a new platform for growth.
Group revenue increased by 7% to £6.0bn and adjusted operating profit increased by 1% to £561m.