Heavy spending on advertising and the high price of wheat saw margins tighten for Kingsmill over the previous year, according to brand owner Associated British Foods.
The company said its Allied Bakeries subsidiary had achieved “only partial recovery of higher wheat costs” due to the “extremely competitive market”.
However, in its latest trading update Associated said full-year sales and profits across the group as a whole would be up on the previous 12 months.
The Twinings Ovaltine hot beverages business performed well in both the UK and the US, the company said, as did its UK grocery arm. But trading at its George Weston Foods business in Australia had proved “much weaker” than anticipated.
“Improvements were made in tea product quality and packaging, facilitated by recent investment in new production lines,” Associated said.
“Significant investment to upgrade tea production in Andover, which supplies the UK market, is under way and the new tea plant in Poland is now fully operational supplying international markets.”
Profits at its sugar busines would be "well ahead" of last year, it added.
Meanwhile, sales at the company’s Primark clothing retail business were up 3% on a like-for-like basis. Associated will announce its full-year results on 8 November.
Allied Bakeries supply chain gets new director (20 August 2011)
Kingsmill partners with the Big Lunch for 2012 (12 August 2011)