The plant baking industry is in improved financial health, despite negative indications in a new Key Note market report on bread and bakery products.

The Market Report 2006 shows widespread losses in the industry – from the likes of Fine Lady Bakeries, British Bakeries and Allied Bakeries’ umbrella group ABF Grain Products.

But bakery analyst David Lang, from Investec, told British Baker the figures drawn from records at Companies House did not paint a full picture.

“These numbers only look at things at the pre-tax profit level and not at all the muck that goes in above that,” he said.

In fact, plant bakers are seeing pricing improve, said Mr Lang. And the industry’s structure is sounder, following the collapse of plant baker New Rathbones, which will no longer be clocking up massive losses and depressing prices.

The £13.8 million loss recorded for ABF Grain Products, which comprises Allied Bakeries and Speedi­bake, was an artificial figure, he added.

Taking into account the fact that flour is not sold at market rates between parent Associated British Foods’ baking and milling businesses, plus impairment charges and accelerated

depreciation, Allied Bakeries probably made around £15m profit, Mr Lang calculated.

Meanwhile, figures for Heygates-owned Fine Lady Bakeries were also likely to be distorted by internal flour prices between the milling and baking businesses. More importantly, Fine Lady was doing better now than at the time the figures were reported, Mr Lang suggested.

At British Bakeries, figures were distorted by restructuring costs, transfer flour pricing between it and the Rank Hovis milling business and one-off expeanses, he said.

British Bakeries probably made a £30m profit in 2004 and between £35m and £50m in 2005, before exceptional items and if flour costs were calculated at market rates, Mr Lang added.

And, although William Jackson reported a £9,000 loss in the UK, its export business showed a £97,000 profit.