Healthy progress at Northern Foods

NORTHERN Foods today said it had upped revenues over the first half of its financial year thanks to increased selling prices which offset manufacturing cost inflation.

The Leeds-based food manufacturer, which produces ready meals, sandwiches and salads, frozen foods, baked products, biscuits and puddings, said it expected to meet full year expectations after a healthy performance over the 26 weeks to September 27.

In a trading statement ahead of its interim results on November 11, Northern Foods said that despite “a challenging external environment”, total revenue was up 6.5% and underlying revenue up 3.9% on the previous year.

Underlying revenue has been driven by progress in recovering input cost inflation through selling price increases averaging 5.6%, which offset lower volumes of 1.7%, the group said.

Performance has also been boosted by a new TV advertising campaign for Fox’s biscuits, which are produced by Northern Foods.

Stefan Barden, chief executive of Northern Foods, said: “Northern Foods continues to make good progress in the development of our business, despite the challenging environment. We have excellent products, a strong balance sheet and are making very good progress in strengthening our core business, which will enable us to take advantage of the opportunities which this environment provides.

“Although profits are weighted to the second half of the year, at this stage we remain on schedule to deliver profit before tax and restructuring in line with expectations.”

He said that as expected, commodity price movements and a stronger Euro had provided challenging operating conditions.

Northern Foods said the mothballing of its Fenland Foods factory in Grantham, Lincolnshire, which was completed in August, would result in a first half restructuring charge of around £25m, of which cash costs were approximately £6m.

The group did not update on the situation at its Fox’s biscuit factory in Batley, West Yorkshire.

Northern Foods, which owns the site, has announced plans to invest £40m in a new factory and will close one of two sites – either Batley or its Uttoxeter factory in Staffordshire – which will then be combined.

It said revenues in its chilled food division had grown despite a decline in the wider ready meals market.

However, the poor summer weather hit revenues in its sandwiches, salads and chilled pizzas.

Bakery and frozen food revenues were also up.