In a pre-close trading update today, Associated British Foods (ABF) stated that revenue in its Grocery division was expected to be ahead of last year as it benefitted from price increase action taken during the year to offset rising costs.
It noted that further pricing action was underway, but adjusted operating profit will come in below last year due to the lag between input cost inflation and revenues resulting from subsequent price increases.
Without revealing figures, ABF said that Twinings sales reflected a return to more normal levels of demand after the Covid lockdowns of last year and were supported by further new product launches in the wellness category. Ovaltine sales were ahead with continued strong performance in Switzerland, Thailand and Nigeria and a return to stronger out-of-home consumption.
Allied Bakeries sales were said to be ahead of last year, but losses increased with “significantly higher” costs for wheat, energy and distribution. Although pricing action at AB World Foods and Jordans Dorset Ryvita led sales to be ahead, margins declined. Westmill benefited from the continued improvement in restaurant and takeaway trade sales.
On the outlook for its next financial year, the group expects profit across its food operations to be ahead of this year with further “significant” input cost inflation and pricing action. It added that there would be additional investment in growth initiatives and higher marketing spend.
