Associated British Foods: The UK Bakery Market Remains Competitive

Associated British Foods (ABF) sustains the UK bakery market remains intensely competitive with a combination of over-capacity in the industry driving manufacturers towards marginal pricing, and retailers seeking to prove their value credentials in essential shopping items such as bread.

ABF’s preclosing statement for its interim results to 28 February 2015 comes after the price of several branded and supermarket own-brand loaves were slashed to just 75p.

“As retailers drive for value and range simplification, already tight margins have come under further pressure and Allied Bakeries’ profit will be lower than last year as a result. Since its acquisition last October, Dorset Cereals has traded well and its integration with Jordans Ryvita is on track”, ABF explains.

Revenues in the first half on ingredients are expected to be ahead of last year at constant currency and broadly the same as last year at actual rates. Operating profit for the half year will be well ahead of last year, with a good recovery in yeast and bakery ingredients and a stronger performance from ABF Ingredients.
Revenue and profit improvement at AB Mauri was achieved in most areas of the business as benefits from the continuous improvement programmers were delivered, particularly in the optimization of the supply chain. However, trading conditions in South America proved to be challenging due to high inflation in Argentina and Venezuela and an economic slowdown in Brazil.