Martin Adamson, chairman of Associated British Foods (ABF) said the UK food group will not be immune to the worsening economic climate and predicted "little change" in net earnings over the current year.

Speaking at the company's AGM today (5 December), Adamson said ABF's budgets are set for some progress in operating profits over the current year but expected little change in net earnings due to "additional interest expense".

However, the chairman noted that trading in the current year was up to expectations.

"The economic background is the most severe for a very long time," said Adamson. "There is also an unusually high degree of uncertainty about the way economic conditions will develop over the coming months.

"The group's businesses will not be immune to the worsening economic climate. However, by the nature, range and market position of the group's businesses we are well placed to face this demanding environment."

Adamson noted that ABF had faced "sharply" rising commodity costs for most of the year and, although those pressures had eased, the company was facing "increasingly volatile" exchange rates.

ABF is currently in negotiations with Ebro Puleva that will see it acquire Azucarera Ebro, the sugar business of the Spanish food group.

The company produces around 50% of the sugar consumed in Spain and Portugal. If the purchase proceeds, Adamson said it would "greatly strengthen" ABF's European sugar operations.

Ebro Puleva will receive a total consideration of EUR526m (US$664m) for the business, consisting of a payment of EUR385m from ABF and an additional EUR141m from third parties - principally the EU restructuring funds established under the CMO sugar reform.