Associated British Foods (ABF) has announced a successful financial year for the group. However, the bakery business records a decline.

ABF is the owner of Allied Bakeries, operating across the UK brands such as Burgen, Allinson, Sunblest and Kingsmill. A difficult trading environment in the UK bread market led to a decline in revenues at Allied Bakeries and it sustained a loss, according to the announcement made by the group. 

ABF says that they are continuing to invest in their brands and are working closely with its customers to improve the profitability of the bakery business.

The report shows that the Kingsmill relaunch earlier this year was well received by consumers. However, a significant margin decline was caused by a combination of factors, including low retail prices, a resurgence of lower margin own-label products (as retailers sought to differentiate their bakery offering), and inflationary cost pressures . 

Jordans and Dorset Cereals continued their international expansion, with the brands now being sold in 75 countries. Overseas sales of Jordans are now greater than those in the UK, according to ABF.

Country Crisp and the launch of Frusli bars drove strong sales growth in France and further success was achieved in Australia, where the brands lead the growing granola market. Trading conditions in the UK were more challenging for Ryvita, with a larger crispbread market share being taken by own-label driven by the growth of the European retail discounters.

On the other hand, AB Mauri delivered another year of significant improvement, with growth achieved in yeast and bakery ingredients. North America benefited from successful bakery ingredient product launches although the market for bakery yeast remains highly competitive. The business was well represented at the International Baking Industry Exposition (IBIE) held last October, where it promoted its baking technology credentials to attendees from more than 100 countries. The EMEA region delivered profit growth and Asia’s results improved following last year’s rationalization of production facilities in China. Although the economic climate in South America remains challenging, operating performance was robust. Capital investment in a new bakery ingredients plant in Buenos Aires was completed at the end of the financial year. 

George Weston, chief executive of ABF, said: “This was a highly successful year for the group. These results reflect our international diversity, and the strong underlying performance of our businesses was driven by management actions throughout the year. Capital investment was a record as we continued to pursue the opportunities to grow our businesses into the future.”

Group revenue of GBP15.4bn was 15% ahead of last year and adjusted operating profit of GBP1.3bn was 22% ahead. Adjusted operating profit is stated before the amortization of non-operating intangibles, transaction costs and profits less losses on disposal of non-current assets.  

Related articles: 

ABF: Bread prices in the UK remain at their lowest level for eight years 

ABF's trading update: Allied Bakeries is increasing its volumes