Sales volumes up at Allied Bakeries, but market remains ‘challenging’

Kingsmill
Kingsmill has gained in sales but suffered from lower profitability
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Associated British Foods (ABF) has revealed that Allied Bakeries saw increased sales volumes over the financial year, but overall profits across the group are expected to decline. 

In this morning’s pre-close update for the year to 12 September 2015, it said the impact of currencies and the performance of its sugar division will see an overall decline in annual profits.

The “challenging” UK bread market and lower bread prices have resulted in lower profitability. This despite the Kingsmill brand being relaunched in May and revenues from Sandwich Thins continuing to build following last year’s launch.

ABF said that in grocery operating profit is expected to be ahead of last year with an increase in margin and revenue will be lower, largely as a result of commodity price deflation.

Revenue and adjusted operating profit for AB Sugar, at both actual and constant currency, will again be “substantially” lower than the previous year following further decline in European sugar prices.

Sugar prices in the EU have now stabilised and ABF expects to see some price recovery during 2015/16.

Silver Spoon's cost reduction programme has improved operational efficiency. Commercial success this year included the securing of two supply contracts with major UK retailers. Since its acquisition last October, Dorset Cereals has traded ahead of expectations and its integration with Jordans Ryvita has gone well. Jordans continued to perform well despite lower Ryvita crispbread sales as a result of the “competitive market”.

A statement said: “We have completed our major capital investment programme and this year have reduced waste, further improved production processes and manufactured products of a consistently high quality.”

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