Associated British Foods (ABF) said it had "stopped the rot" at its Allied Bakeries business as it posted preliminary results for the year to 15 September this week.

The plant bakery business relaunched its flagship Kingsmill brand in February, which improved sales volumes and helped "stem decline in market share" raising it above pre-relaunch levels, said a spokesman. "We have stopped the rot you could say," he commented.

However, Allied Bakeries still underperformed over the year due to rising costs. It had a particularly poor first half when lower volumes and non-recovery of higher wheat costs affected profitability, ABF said.

A combination of price increases to recover increased wheat costs from 2006, higher volumes and significant enhancements in operating efficiency resulted in an improved performance in the second half.

Unprecedented increases in the cost of bread-quality flour over the summer of 2007 had resulted in the need for further bread price increases which are being negotiated with the major retailers, it revealed.

Details of the increase amount are not being revealed. The company already put up its prices in September, reflected in an 8p a loaf price increase at the retail end.

ABF’s sugar business was hit by the impact of sugar regime reform, it said, with China and South Africa its big growth markets on sugar.