Allied Bakeries recovering losses, reports ABF

Allied Bakeries has made “some progress” in reducing its previously announced losses, according to its parent company.

Allied, which produces own-label bakery products and brands including Kingsmill and Allinson’s, made a loss in the “low tens of millions” in the year ending 16 September 2017.  The bakery business has discussed higher bread prices with retailers after coming under pressure from low retail pricing and a highly competitive bread market. It has also been hit by rising wheat costs, driven by factors including the devaluation of sterling.

In a trading update issued today (18 January), Allied Bakeries’ owner Associated British Foods (ABF) stated: “Volumes at Allied Bakeries remained strong and some progress has been made in reducing the loss for this financial year.”

Research by British Baker shows that, of Britain’s three biggest bread brands, Kingsmill has shown the steepest increase in the price. Looking at average pricing of large loaves in supermarkets, Kingsmill rose from 90p in January 2017 to £1.02 this month. Hovis has risen 5p to £1.19 over the period, and Warburtons 10p to £1.29.

In a trading update for the 16 weeks ended 6 January 2018, ABF stated that its total group revenue was up 4% year on year at constant currency.

The company said sales from its Ingredients division, which includes AB Mauri and ABF Ingredients, was up almost 4% on last year at constant currency and down 1% at actual exchange rates.  ABF said it expected good progress and margin improvement from the division for the full year.

However, revenue at the AB Sugar business was down 12% year on year at constant currency, and ABF said it expected revenue and profit to now be lower than previously forecast. The company added this was a result of significantly lower EU sugar prices, which hit its UK and Spanish businesses.

“The EU sugar regime ended on 30 September 2017, resulting in the end of sales quotas and the removal of constraints on exports,” it stated. “Sugar production in the EU during the 2017/18 campaign is expected to be substantially higher than last year as a result of exceptionally high beet yields and an increased crop area.”

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