Associated British Foods has said that overall its businesses have performed well in the second half and it expects operating profit growth to be almost as strong as that achieved in the first half.

In its grocery division, Twinings and Ovaltine achieved strong sales growth and benefited from a number of marketing initiatives. However, bakery profitability in Australia was further affected by both competitor pressure in the bread market and by the start up costs at the new Sydney bakery. In the UK, although Kingsmill volumes increased, Allied Bakeries was affected by lower than expected pricing and volumes.

The company said that at British Sugar, as expected, the profit in the UK has been affected by the oversupply of sugar in the EU this year and higher energy costs. However, profit benefited from firmer prices in China and better operational performance in both Poland and China.

"The European Commission published its proposals for the reform of the EU sugar regime in June and our best estimate is that these proposals will reduce operating profit from our sugar operations by some £10m (US$18.3m) in 2006/7 and some £40m per annum thereafter. These proposals are now subject to EU working party consideration with a target of confirmation of their final form in mid November," ABF said.

The company, which also said its Primark discount clothing chain traded very strongly, is scheduled to announce its results for the full year to 17 September on 8 November 2005.