Greggs, the high street bakery, blamed an unseasonably warm winter and higher energy costs for a 12.8 per cent fall in full-year profits, but said that 2007 had started strongly.

The group, which also operates the Bakers Oven chain, said that “the more positive” sales trends from the end of last year had continued through to this year.

Like-for-like sales in the nine weeks to March 3 were up 3.9 per cent, marking an improvement from the 0.9 per cent sales growth recorded in the second half of last year and the 0.5 per cent growth recorded over the whole year.

However, the shares slipped 0.38p to 46.89p, as Greggs reported profits for the year to December 30 of £43.7 million before tax and restructuring costs, against £40.2 million last time.

Sales in the period were up 3.3 per cent to £551 million.

“Trading conditions during 2006 were the most demanding that we have encountered for well over a decade and these were reflected in our disappointing like-for-like sales performance,” Sir Michael Darrington, the managing director, said.

The figures were impacted by “an exceptional increase” in gas and electricity costs last year, which added £4.5 million to the company’s energy costs.

Including the £3.5 million incurred in costs from the restructuring of the Bakers Oven brand last year, pre-tax profits fell 19.8 per cent to £40.2 million.

Greggs, which will open 25 new outlets in the coming year, said that it expected 2007 to be a “year of progress”.

The group plans to overhaul its product ranges and enhance its customer service to appeal to a broader market.

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