Shares in foods group Greencore fell sharply on the Irish market yesterday after the company warned of difficult trading with margins being squeezed in some of its businesses. Greencore shares lost 16 cents and closed on €2.30 (£1.81).

Analysts had been expecting some negative comments on trading from Greencore, especially given the difficulties in the British baking industry that were emphasised in a trading statement last week from Northern Foods. Results from Greencore's Kears baking business in the UK will be well below expectations because of lower bread consumption and a squeeze in margins.

Since the €582 million Hazlewood acquisition in November, Greencore has sold €40 million Hazlewood assets. Greencore chief executive Mr David Dilger expects the sale of Hazlewood assets to realise £120 million sterling (€194 million). This is expected to result in an exceptional charge in the current year of about €50 million.

Mr Dilger said: "While overall trading conditions are far from easy with margin pressures in many of our businesses, we are encouraged by the progress made in the integration, synergies and disposal programme and in particular by the growth being achieved in the chilled foods sector."