ABF let down by flagging bakery brands

By Catherine Boal

- Last updated on GMT

Related tags Associated british foods

"Unsatisfactory trading" from Associated British Foods' (ABF)
bakery sector has pulled down profit for the food group who
announced a 21 per cent drop in operating profits from £550m
(€820m) to £433m (€645.5m) last week.

The company, who announced the yearly interim results on Tuesday, said its bakery division, Allied Bakeries, had been severely hit by high commodity prices, mounting energy costs and lower sales.

Reflecting the consumer trend for healthier products at the expense of mainstream items, volume sales of Kingsmill bread have fallen while ABF's Ryvita brand performed strongly throughout the year, capitalising on its image as a healthy alternative to standard snacks.

Building on its position as UK market leader, Ryvita launched new flavours in its Minis range as well as new 'Ryvita goodness' cereal bars.

Chief executive George Weston said: "For some years now Ryvita has delivered consistent sales and profit growth driven by increased marketing support and new product introductions."

In order to revive flagging Kingsmill sales, ABF said next year would see investment in the brand and a new management team behind its promotional strategy.

ABF chairman Martin Adamson said: "It has been a very disappointing year for Allied Bakeries with revenue declines in both Kingsmill and own label and profitability has sharply reduced.

"The new management team has developed detailed plans for the reinvigoration of the brand. With the need for brand investment, no immediate improvements in profitability should be expected next year."

Elsewhere, ABF recorded poor performance in its core sugar business but experienced growth in its ingredients sector.

International yeast and bakery ingredients subsidiary AB Mauri contributed towards the group's 25 per cent increase in revenue to £729m (€1.087m) and a 26 per cent increase in profit to £82m (€122m).

Overall group sales increased by seven per cent, with adjusted profit increasing by just one per cent.

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