Increased sales volumes for Allied Bakeries
Sales volumes at Allied Bakeries increased over the financial year although the UK bread market continued to be very challenging and lower bread prices resulted in a reduction in profitability, according to Associated British Foods.
The Kingsmill brand was relaunched in May with new packaging across the range. Following last year’s highly successful launch, revenues from Sandwich Thins continued to build and benefited from the addition of a wholemeal variant to the range, according to the Annual Results Announcement. The company completed the major capital investment programmed during the year, introduced a variety of initiatives which reduced waste and further streamlined production, and delivered products of a consistently high quality throughout the year.
Silver Spoon substantially improved operational efficiency this year and achieved commercial success with increased volumes to the major UK retailers.
In the home baking sector, Allinson maintained its position as the leading bread flour brand. Since its acquisition in October 2014, Dorset Cereals has traded ahead of our business plan and its integration with Jordans Ryvita went smoothly. The business gained market share and three products won 2015 Great Taste awards. Jordans continued to perform well, also gaining market share in the UK and launching very successfully in Australia. It also launched its Jordans Farm partnership in conjunction with LEAF (Linking Environment and Farming) and the Wildlife Trust ensuring improved sustainability and biodiversity on the farms of the oat suppliers. Ryvita had a more difficult year with lower crispbread sales in a competitive market. The introduction of a second sweet crispbread variety, Apple & Cinnamon, was well received and Ryvita Thins continued to grow strongly.
Tip Top bread volumes increased but margins fell as retailers featured bread in their drive for lower prices with heavy price promotion activity more than offsetting the benefits of cost reduction and productivity improvements across all bakery sites.
This financial year has been characterized by continuing investment in businesses with growth opportunities and a relentless drive for improved efficiencies and cost reduction. The two major challenges facing the group have been well flagged – food commodity deflation and substantial movements in currency markets.
George Weston, Chief Executive of Associated British Foods, said: “We delivered a strong operational performance despite the challenges of food commodity deflation and big movements in exchange rates. The group continues to generate strong cash flows and to reduce net debt. While marginally down, our earnings per share result underlines the group’s strength.”
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