Associated British Foods (ABF) expects its Grocery division to deliver mid-single-digit sales growth in the fourth quarter, as it presses ahead with the integration of Hovis.

It said Hovis’ production and distribution operations were being integrated with its existing bakeries business “at pace”, with ABF targeting significant cost synergies to support investment in innovation and establish a sustainably profitable operation.

However, Grocery adjusted operating profit for the 2026 financial year is now expected to come in slightly below previous expectations, largely reflecting weaker-than-anticipated performances from Twinings and Ovaltine.

Twinings recorded good growth in Australia, but sales in the UK and Europe were hit by the prolonged hot summer, which reduced demand for hot tea.

Meanwhile, growth at malt drink brand Ovaltine was affected by the timing of sales in Thailand as ABF moved to a new distribution model.

Looking ahead to 2027, ABF expects Grocery adjusted operating profit to be slightly ahead of 2026. The forecast includes a one-off impact from consolidating Hovis’ losses during ABF’s first year of ownership, before anticipated synergies and profit growth in subsequent years.

Elsewhere in ABF’s food operations, Ingredients is expected to deliver sales growth of around 10% in Q4, supported by growth across AB Mauri’s yeast and bakery ingredients markets and its speciality ingredients portfolio.

Sugar remains a more significant challenge for the group. ABF expects the division to report an adjusted operating loss towards the upper end of its previously guided £25m to £60m range for 2026.

For 2027, the business has forecast a substantially wider adjusted operating loss of between £70m and £170m, citing factors including higher gas costs, production levels in Africa, weather impacts and currency movements.

The group has already announced plans to reduce its UK sugar processing footprint from four sites to three, with beet processing at Cantley due to cease in 2027.

ABF chief executive George Weston said Grocery and Ingredients had both delivered “good growth” during the quarter, although the prolonged hot weather across the UK and Europe affected demand for Twinings.

At group level, adjusted operating profit for 2026 is expected to be broadly in line with previous expectations, while adjusted earnings per share is forecast to come in ahead of expectations.

ABF is scheduled to publish its full-year results on 3 November 2026.

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