10 November 2006 | Paul Snell

Profits at two of the UK's major food manufacturers, RHM and Associated British Foods (ABF), have been hit by rising prices.

RHM, the manufacturer of Hovis bread and Mr Kipling cakes, said that high energy costs and wheat prices had both had an impact on expected profits. The high cost of wheat is expected to cut profits by £2 million between May and October.

The company said the full impact on yearly profit would depend on fluctuations in the wheat price, and increases in the consumer price of bread.

However, RHM also announced that its procurement and logistics department had saved £8 million in the first half of the year. The company declined to comment on how these savings had been achieved.

ABF also revealed that higher energy costs had affected its profits this financial year. Profit before tax at the company fell by 20 per cent to £419 million for the year ending 16 September.

SMnov2006