Associated British Foods said performance of its Allied Bakeries division was unsatisfactory as it posted its interim results this week.
While the group’s sales rose by 10% to £2,887 million, adjusted pre-tax profits fell by 2% to £225m in the 24 weeks to March 4, 2006 compared to the same period in 2005. Kingsmill and own-label revenues both declined and profits had fallen, it said. A recovery in profitability is not likely until the second half, despite steps to recover lost volumes and reduce costs.
In its ingredients division, AB Mauri performed well, contributing strongly to an increase in revenue of 35% to £343m, and profits growth of 32% to £33m for the period.
In its British Sugar division, transition to the new EU sugar regime will continue to impact on profits through to 2007, it said. However it was confident British Sugar would be satisfactorily profitable when the transition was complete. “As expected, British Sugar has experienced price pressures, but it is well- positioned for the medium term and we remain confident about its prospects,” said ABF chief executive George Watson.
ABF said costs would “continue to be adversely affected” by conditions in the UK sugar business, its bakery operations and energy costs.