In a trading update, Associated British Foods has said sugar trading has been difficult but the company has thrived in grocery and ingredients performance.

The UK retail group has issued a statement as it enters the close period for its interim results – to be announced on 19 April 2006.

Trading for subsidiary British Sugar in the UK and Poland was reported in the statement as difficult and operating profit down, with price pressure on contracts for this calendar year and sharply higher energy costs to blame. The company is now closing down two of its four factories in Poland to reduce costs and exploit new revenue opportunities.

Associated’s grocery division ACH Food Company has been performing better, benefiting from a continued strong contribution from Capullo in Mexico. Twinings, Ovaltine and Ryvita also posted strong sales growth. However, the company said bakery profitability in Australia has decreased and UK-based Allied Bakeries will have lower volumes than expected.

The company said AB Mauri will contribute strongly to Associated’s ingredients business – with a full half year of profit.