UK food producer Associated British Foods (ABF) has provided an update on trading during the second half of the financial year, which will end on 13th September 2025.
ABF said that grocery sales across H2 were expected to be in line with the prior year, reflecting “good growth” in its international brands and offset by lower sales in Allied Bakeries and US oils.
In the UK, Allied Bakeries had lower sales and an operating loss in a challenging market, which it said was “as expected”. In H2 it agreed to acquire Hovis Group Ltd, subject to regulatory approval. By combining the production and distribution activities of the two businesses, ABF said it expects to “drive significant cost synergies” and enable innovation “to create a sustainably profitable business”.
For the UK’s grocery adjusted operating profit in H2, it expects figures to be “slightly below” previous expectations, which it said was “mostly due to one-off restructuring costs”.
Ingredients push up profits
Ingredients sales were expected to be “broadly in line” with last year, and overall sales growth was impacted by currency devaluation and an easing of inflation in Argentina. ABF’s portfolio of speciality ingredients businesses, ABFI, reportedly “performed well” overall, and the producer said it expects a “strong adjusted operating profit” in H2.
However, ABF expects the adjusted operating loss for its sugar category to be close to £40 million following the closure of its Vivergo bioethanol plant. In H2, sales and profitability of its sugar business in the UK and Spain had “declined significantly” after European sugar prices remained low and beet costs were high.
Within its US-focused businesses, sales of consumer oils were lower, but ABF said that it had maintained a “strong” market share. In Australia and New Zealand, the grocery brands “performed well” in a consumer environment that ABF said “remains weak”, as the producer highlighted that it had benefitted from the recent acquisition of The Artisanal Group.
“Against a backdrop of continued volatility in 2026, we will start to see the benefit from our recent actions and continued investment.”
George Weston, chief executive of Associated British Foods, said: “I’m pleased with how the Group has performed in the second half of our financial year in what continues to be a challenging environment, characterised by consumer caution, geopolitical uncertainty and inflation. In our food businesses, overall trading in the second half was in line with our expectations.
“This has also been a busy period strategically, including the decision to close the Vivergo bioethanol plant, the restructuring of our Spanish sugar business, and an agreement for Allied Bakeries to acquire Hovis to create a financially sustainable UK bakeries business. Against a backdrop of continued volatility in 2026, we will start to see the benefit from our recent actions and continued investment.”
