A jump in sugar revenues, boosted by strong UK production and record Chinese prices, has helped Associated British Foods forecast a "significant increase" in full year profits.

Analysts issued a series of upgrades for shares in the UK livestock feed-to-retail group after it unveiled a 17% rise in sales for 16 weeks to January 2, led by a 23% jump in takings from sugar on a like-for-like basis.

The UK sugar unit had, thanks to bumper beet yields and high levels of sugar in the crop, produced 1.3m tonnes of the sweetener.

"The business is having an excellent campaign," ABF said, also noting a fillip from low energy costs and the weakness of the pound against the euro, the currency of major export markets.

Record prices 

The group's Chinese business, which has been dogged by poor crops, was being supported by domestic prices which were "now at record levels", amid a global rally prompted by disappointing output in Brazil and India, the world's top two producers.

"A significant improvement in results is expected year-on-year," ABF said.

Including the Spanish Azucarera business acquired in April, sugar division revenues were up 68% year on year, ABF said, adding that group results were "very encouraging and ahead of our expectations".

"We expect good revenue growth and a significant increase in operating profit this year."

'Substantial growth potential'

The results prompted analysts at Investec to lift their rating on ABF shares to "buy" from "hold", with Credit Suisse raising its target on the stock to 940p from 700p.

At Panmure Gordon, analyst Graham Jones raised his price target by 20p to 970p, highlighting the "impressive" performance at the sugar division, which had "substantial future growth potential" in Africa, China and Europe, thanks in part to the potential for refining the sweetener into ethanol.

The UK sugar unit looked on track to raise annual profits to £105m from £80m the year before,

ABF shares closed 1.1% higher at 869p in London.