Kingsmill and Twinings owner Associated British Foods (ABF) profits jumped over the full year but a reduction in European sugar pricing is set to “significantly” impact the British Sugar operator next year.

In the year to 14 September, the British food group’s adjusted pre-tax profit surged 33% to £1.9bn, while grocery adjusted operating profit was up 17%.

Grocery sales also increased 4%, which ABF said reflected strong margin improvement while investing in marketing.

Across its ingredients division, sales grew 2%, while adjusted operating profit rose 12%, led by yeast and bakery ingredients, and sugar sales and profits were also “strongly ahead of 2023”, according to the food group.

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ABF chief executive George Weston said: “Our food businesses delivered good growth and strong profitability this year. We are benefitting from an easing in input costs, as well as our increased investment in marketing, strong commercial execution and good product innovation.”

Looking ahead, in grocery, ABF said it will continue to drive sales momentum, underpinned by increased marketing investment and in ingredients it expects continued growth in yeast and bakery and improved growth in specialty ingredients.

Meanwhile in sugar, the food manufacturer expects the reduction in European sugar pricing in the fourth quarter of 2024 to impact performance in its sugar business “significantly” in 2025, with adjusted operating profit for the overall sugar segment expected to be in the range of £50m to £75m.

However, it expects profitability to recover in 2026 and be more in line with 2024 as a result of lower beet prices that have been contracted and a rebalancing of supply and demand in the market.

Weston added: “Looking ahead, the group is well-positioned. Strong cash flow generation is enabling disciplined capital allocation to growth opportunities across the Group and we have ongoing multi-year projects to deliver our focused sustainability priorities.

“We believe our long-term, patient investment approach will deliver strong returns and continue to create value for all stakeholders.”