A "sharp recovery" at British Sugar UK, and the success in grain traders in foreseeing the market correction, helped Associated British Foods maintain its earnings despite losses on the disposal of a US packaged oils business.

ABF, the company behind brands such as Silver Spoon sugar and Mazola vegetable oil, said that the British Sugar division had "reversed the decline of recent years", when it suffered from low market prices as well as difficulties of a new European sugar regime.

"Very favourable growing conditions in the UK yielded an excellent beet crop with sugar per hectare at record levels," George Weston, the ABF chief executive, said, with factory upgrades also improving the division's performance.

The recovery fuelled a 24% jump to £189m in ABF's sugar profits for the year to September 12, on revenues also up 24% at £1.58bn.

'Foresaw grain downturn' 

Mr Weston also highlighted "another very strong year" at ABF's agriculture division, which includes the Frontier grain-to-fertilizer joint venture.

Frontier managed "exceptional results" by foreseeing the collapse in grain prices from last year's highs, while exploiting its national footprint in the UK to match buyer demand to a crop which was "not only large but of variable quality".

Agriculture profits rose 3% to £34m on revenues up 15.8% at £1.00bn.

City reaction 

The results – including group earnings flat at £359m, reflecting a £65m pre-tax hit on the sale and closure of businesses – received a mixed welcome in the City.

Panmure Gordon analyst Graham Jones raised his target on ABF shares from 810p to 910p, viewing sugar as the "key growth driver" of "better than expected" results.

Evolution's Warren Ackerman, while terming the results "very solid" kept a "sell" rating on ABF shares, viewing ABF's stock price as "up with events".

ICAP also restated a "sell" recommendation, saying it saw "better investment opportunities elsewhere in the food sector".

ABF shares ended down 1.5% at 820.5p.