Associated British Foods has said its grocery division delivered growth in its third quarter, as the Primark owner welcomed regulatory approval for its acquisition of Hovis.

The Twinings, Ovaltine and Kingsmill owner said grocery revenue rose one per cent in the quarter, reflecting “good growth” across a number of its brands and businesses.

The performance was partly offset by lower sales of US oils, which ABF attributed to reduced spending by its core Hispanic consumer.

Twinings delivered strong growth across key markets including the UK, US and Australia, driven by continued demand for wellness teas.

Ovaltine also continued to recover from disruption caused by cocoa-related price increases last year.

ABF said there was no change to its full-year guidance for the grocery division.

The group also highlighted the Competition and Markets Authority’s recent decision to approve its acquisition of Hovis Group.

ABF said combining Allied Bakeries and Hovis would help create a more sustainable and profitable bakery business by bringing together production and distribution operations.

It added that the deal would allow the group to drive “significant cost synergies” and reinvest in product innovation.

The CMA cleared the deal last month after concluding the acquisition would not result in a substantial lessening of competition in the UK bread market.

ABF said it was now working on next steps towards completion.

The update comes as the group continues to face pressure in sugar, where sales fell four per cent during the quarter due to lower average selling prices in Europe, rain-related production delays in Tanzania and higher imports into South Africa.

The business now expects its sugar division to deliver an adjusted operating loss of between £25m and £60m in the 2026 financial year.

ABF said higher gas price expectations, linked to the duration and severity of the Middle East conflict, had hit its European sugar profit outlook.

The group warned the sugar result could deteriorate further in 2027, depending on European sugar prices, energy, fuel and fertiliser costs, production levels in Africa, El Niño weather impacts and currency movements.

Chief executive George Weston said the group had delivered a resilient third-quarter performance, with grocery and ingredients delivering “solid results”.

He said: “Across the group, we continued to take targeted actions and make investments to drive performance.

“Several long-running projects have either recently been completed or are nearing completion, reinforcing our confidence in the group’s long-term growth prospects.”

Group revenue was flat on a constant currency basis in the quarter, while year-to-date revenue was down one per cent.

ABF said its full-year outlook was unchanged apart from sugar, with group adjusted operating profit and adjusted earnings per share still expected to come in below last year.

The company also confirmed it remains on track to demerge Primark from its food business before the end of 2027.

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