Silver Spoon owner Associated British Foods (ABF) today reported a 'weaker than expected' performance within its sugar division, but said the current beet campaign in the UK was progressing to plan.

ABF said sugar revenues during its opening quarter, covering the 16 weeks to January 4, were 27% below the corresponding period a year ago, adjusted for currenncy movements,

Besides lower prices within the European Union, which the group had already warned would lead to lower revenues and margins for both its British Sugar business in the UK and its operations in Spain, recent falls in world prices may put further pressure on revenues and margins elsewhere, particularly in China.

Sales volumes in Africa and China were both lower then last year and reduced sugar production in Spain had led to the elimination of non-quota exports this year.

'The UK campaign is progressing to plan. Beet quality and sugar content are encouraging and all factories are operating well.' ABF said. 'Sugar production for the current year is now estimated to be 1.28m tonnes compared with last year's 1.15m tonnes.'

However, it added: 'Lower sugar prices, as the market rapidly adjusts ahead of EU regime reform in 2017, will result, as previously indicated, in a substantial reduction in profit from our sugar businesses this year. With the further recent fall in world sugar prices this reduction will now be greater than previously expected.'

Revenues with the group's agriculture division were flast compared with last year, with lower UK feed volumes offset by growth in China, South America and Asia.

Revenues within the group's grocery division, which includes brands such as Silver Spoon, Twinings and Ovaltine, were 1% down in total but 2% ahead of last year when adjusted for currency movements,

ABF said sales at Silver Spoon had declined as a result of lost contracts and reduced UK sugar pricing but the profit impact has been partially mitigated by overhead cost reduction.

The pattern was similar in the ingredients division, with revenue 2% lower at actual rates but 3% ahead of last year on a constant currency basis.

However, ABF's star performance was again its Primark discount clothing chain, where sales were 12% ahead at constant currency rates and 14% up in total.

The group the growth was driven by an 8% increase in selling space, strong like-for-like growth and higher sales densities from new stores.

'Although like-for-like sales in the first eight weeks were held back by the unseasonably warm weather and the strong comparatives in the previous year, the second half of the period was characterised by excellent Christmas trading with very strong like-for-like growth,' it said.

Overall, ABF said group revenue for the first quarter were 1% on a constant currency basis and flat compared with last year at actual rates, and the group said its profits expectations for the full year remained unchanged.