Kingsmill owner Associated British Foods has reported a 6% rise in grocery sales for the past quarter.

While sales at its grocery arm were up 7% for the 40 weeks to 25 June, the company warned that “the retail environment remains very competitive, with high promotional activity in the large multiple retailers”.

Heavy promotional activity had hit margins for its flagship Kingsmill brand, Associated said in today’s interim management statement. But it pointed to “strong growth on the back of effective marketing” for its Jordans cereal brand and Ryvita crackers.

Sales across the group were up 9% for the year to date, buoyed by double-digit growth by the Primark clothing business.

“Higher commodity costs continued to affect cash flows in the third quarter,” the company warned, but forecast that profits for the second half of the year would be “similar to last year's very strong result”.

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Focus On Bakery (14 May 2011)
Commodity costs squeeze ABF margins (30 April 2011)