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Associated British Foods (ABF) has said that it expects to report full-year profit growth in line with expectations, despite rising flour prices having hit its bakeries business.

In a statement today the company revealed that higher sales at its discount clothing chain Primark and stronger profits from its sugar business had boosted its overall performance.

ABF said that full-year sales and profits at Primark were expected to "substantially ahead" of those reported for 2006. Second-half like-for-like sales unaffected by new openings are expected to grow by seven per cent, despite poor weather over the summer months having hit many clothing retailers, the company stressed.

After opening a number of new Primark stores over the first half, ABF said that it expected to open a further nine during the latter half of the year – to bring its total number of outlets to 170.

Meanwhile overall sales growth for the second-half is expected to be ahead of that reported for the first-half of the year, despite Primark's operating profit margin having been hit by a higher level of discounting and investment in stores.

Full-year profits from ABF's sugar business are also expected to be "strongly ahead", having been boosted by the first year's contribution from African sugar cane producer Illovo, in which the company bought a 51 per cent stake last September. A substantial increase in profits from ABF's Chinese sugar operations has also boosted its performance.

However the maker of Kingsmill bread warned that grocery profits would be lower, partially as a result of losses incurred by its Allied Bakeries unit. Although price increases and a re-launch on the Kingsmill brand earlier this year improved the performance of the business, ABF warned that bread prices would have to rise further in order to recover "recent sharp increases" in the cost of flour.

The warning comes after Hovis-maker Premier Foods warned that it might need to raise bread prices further as a result of rising wheat costs.

In a statement last week the UK's largest food producer revealed that pro-forma trading profits for its Bread Bakeries business almost halved to £19 million in the six months to June 30th.