Shares in Associated British Foods fell in early trading this morning (28 February) despite an improved performance at the Kingmill bread maker’s grocery business.

Shares in ABF fell 3.8% to 987p a share at 9:21 GMT today as the group announced that all segments delivered “good revenue growth” but warned that trading at its clothing retail business, Primark, had been depressed since the start of the year.

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Nonetheless, ABF remained upbeat on the prospects for its grocery unit and insisted that adjusted operating profit will be ahead of last year, with all segments except ingredients “making progress”.

ABF said that grocery profit in the first half will be ahead of last year, benefiting from the reduced level of provisioning for the cost of the manufacturing reorganisation. While Twinings Ovaltine and the UK businesses performed well, “George Weston Foods in Australia disappointed”.

The manufacturer said the trading result for George Weston Foods will be “significantly below last year”, due to price deflation, driven mainly by promotional activity across the market, while increased competition affected the bread and meat businesses.

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The company said that profit from sugar in the first half will be ahead of last year, driven by substantial improvements in Spain and China, “more than offsetting a decline in Illovo”, its African division.

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ABF said its UK agriculture businesses all achieved good revenue and product growth, while sugar beet sales benefited from customers seeking alternatives to cereal-based feeds.

It expects operating profit in its ingredients division to be below last year due to the commissioning costs related to the new yeast extracts factory in Harbin, China.