Northern Foods encouraged by progress

Goodfella’s pizza maker Northern Foods today said its leaner business model had paid off with a 38% hike in half-year profits.

The group is now focused on five key markets – ready meals, sandwiches and salads, pizza, biscuits and Christmas puddings – after selling non-core operations and restructuring its business.

Despite pressure from higher overheads, Northern’s half-year profits of £20.1m (€28.4m) came in ahead of market expectations. It offered a further boost by revealing it had negotiated price rises with its retail customers for the second half of the year, as it looks to offset rising commodity costs.

Northern said the strongest performance of the six months came from its chilled foods business, which makes sandwiches and salads for customers including Marks & Spencer. The division increased operating profits by 62% to £13.6m (€19.2m), although the company said there was still “substantial further progress to be made”.

There was also a return to revenue growth at the bakery division, helped by a significant improvement at the company’s Fox’s biscuits brand.

In frozen foods, profits were lower at £6.1m (€8.6m) – down from £9.8m (€13.8m) a year earlier – after its meat grills business missed out on the important barbecue season due to the poor summer weather.

Overall, chief executive Stefan Barden said the company continued to make progress in delivering on its turnaround strategy.

He added: “The markets in which we operate remain challenging and we retain a degree of caution in light of the current pressure on the consumer. However, we have strong management teams in place and are focused on opportunities to expand, grow and improve returns.”