International food, ingredients and retail group Associated British Foods has warned that it expects a reduction in pre-tax profit for the second half of the year.

Releasing its half-year results to March 4, ABF said: “Operating profit in the remainder of the year will continue to be adversely affected by conditions in the UK sugar business, our bakery operations and by energy costs.”

It added: “As a consequence, some reduction in earnings after tax can be expected in the second-half compared with the previous year.”

The group said that its adjusted half-year pre-tax profit fell 2% to £255m on group sales up 10% to £2,887m.

It added that imbalances in supply and demand within the EU sugar market and changes to the EU sugar regime had resulted in price pressure and a £22m reduction in profit for its sugar business British Sugar.

ABF also said that in its grocery business, which recorded a 1% profit increase to £85m, there had been good organic growth in hot beverages, Ryvita and its Mexican oils business.

However, profit growth had been held back by lower UK bakery volumes at Allied Bakeries and the costs of a new bakery in Sydney, Australia.

“Performance at Allied Bakeries was unsatisfactory,” the group added.