Sausage rolls are one of Greggs' most popular lines

Greggs added that its profits for the second half of 2005 were currently lower than last year.

"Trading conditions have proved less positive," it said.

While like-for-like sales were continuing to expand across its 1,312 outlets, the rate of the growth had slowed, the Newcastle-based firm said.

The firm's shares closed down 4.7%, or 230 pence, at 4650p.

Festive importance

Profits in the second half to date remain below budget and the level of last year Sir Michael Darrington, Greggs managing director See Greggs' share price

Sales in the 19 weeks to 29 October rose by 2.8%, compared with the 3% increase in the first six weeks to 30 July, it said.

Greggs said the final outcome for the second half of the year depended upon the success of its Christmas period.

"Profits in the second half to date remain below budget and the level of last year," said Greggs managing director Sir Michael Darrington.

"However, given the good first half, I believe that we will make modest progress over the year as a whole."

He added that the company was taking efforts to reduce all its costs in the light of higher energy bills.