Northern Foods hit by weaker trading with M&S

Northern Foods today said full year profits would be £6m (€8.6m) lower than last year after poorer sales to Marks & Spencer left Christmas trading short of expectations.

Northern, which makes Dalepak frozen foods, Goodfella’s pizzas and Fox’s biscuits and is the parent company of the Green Isle Food Group in Ireland, said profits for the year to March 31 would come in at £80m (€114.6m) against £86m (€123.2m) last time.

The group said overall sales in its chilled food division in December were lower than expected, reflecting in particular the company’s trading with M&S.

M&S accounts for about a third of Northern’s business and is among its five largest customers, who also include Tesco, Asda, Sainsbury’s and Morrisons.

M&S said on Friday that it was slashing its annual profit forecasts after being forced to make deep price cuts to clear excess Christmas stock.

A Northern spokesman said it had seen lower business volumes from M&S, for whom it makes ready meals, pork pies, sausage rolls and other own-brand fresh food products. He declined to give figures.

Northern said the more difficult Christmas trading and the continuing tough business environment had led to the expectations of lower annual profits before tax and one-off items.

The group has been undergoing a restructuring that has included the planned shutdown of two UK pastry plants at Evesham in Worcestershire and Carlisle, Cumbria, with the previously announced loss of 1,060 jobs.

It has also made losses after goodwill on the sale of businesses such as its Emile Tissot frozen foodservice and Eden Vale Minsterley fresh chilled dairy products operations.

It has reshaped itself under new chief executive Pat O’Driscoll to replace 16 operating companies with four divisions – two focused on chilled products and one each in ambient and frozen food.

Northern, which is facing pressure from rivals amid a price war in the supermarket sector, said it continued to make good progress on its short term priorities such as factory rationalisation, divisional restructuring and central buying.

“Although the market place remains challenging and highly competitive, we are confident the actions already taken and those planned will have medium and long term benefits for the group,” Northern said in a trading update.