Northern Foods enjoys healthy Christmas trading

BISCUIT TO pizza maker Northern Foods today reported positive trading in the run-up to the festive season after seeing a strong performance from its bakery division and the launch of a Christmas pudding.

The Leeds-based firm, which makes sandwiches and ready meals for Marks & Spencer, also said it expected group pre-tax profits for the full year to meet market expectations.

But chief executive Stefan Barden said market conditions continued to be “challenging” as groups such as Northern try to counter the impact of inflation on its ingredients.

For the 13 week period to December 29, underlying revenues (excluding the impact of currency rate changes, product categories no longer manufactured, acquisitions and discontinued operations) increased by 3.5% compared to the same quarter in 2006.

This met the board's expectations and reflected average prices which were 3.5% higher.

Northern said its strategy to simplify the business and move to higher added value products had seen its operating margin improve over the third quarter of its financial year.

It said third quarter underlying revenue in its bakery division was 4.2% ahead of the same period in 2006, while average prices increased by 7.3%.

Northern successfully launched 'The Pudding' which helped its Matthew Walker Christmas pudding business enjoy revenue growth of 3.4%.

Stefan Barden, chief executive of Northern Foods, said: “We continue to make steady progress across the group. Our key Christmas period has been delivered effectively and to plan, and the recent successful recovery of commodity cost increases has had limited impact on sales volumes.

“Our operational plan continues to drive improved performance and we look to enhance this through selective, value creating, bolt-on acquisition opportunities.

“Despite the continued challenging market conditions, we are confident that we will continue to make progress in realising the full potential of the business.”

Northern said it would continue to invest in its business to increase capacity and create value.

Earlier this month, Northern acquired Baxter's chilled soup operations in Grimsby and also bought ready meals maker Ethnic Cuisine in November.

Northern saw growth in revenues in its chilled foods and sandwiches and salads divisions in the third quarter, but these successes were offset by a mild autumn which hit its ready meals division.

Sales in its frozen foods division were also down.

The group reduced net debt over the quarter to £213m.

In November, Northern reported that pre-tax profit rose to £20.1m for the 26 weeks to September 29 from £14.6m last time, while revenue from continuing operations was £438.6m compared to £427.8m for the same period in 2006.