Falling sales in frozen hits Northern Foods

09 November, 2010

Bakery profit was up, but falling sales in Northern Foods’ Frozen division hit total profit for the 26 weeks ended 2 October 2010. Operating profit stood at £17.5m compared to £20.5m in the first half of the 2009/10 financial year.

The firm saw a “continued strong biscuits performance” within Bakery, with profits up £2.1m to £10.3m. New product development was delivered for Fox’s, and its retail customers, including Marks & Spencer.

The firm noted its trading, as usual, is weighted heavily towards the second half of the financial year, and it currently has a “good order book” across its Matthew Walker puddings brand in readiness for Christmas.

Northern Foods also continued with its £26.5m investment in new automated technology across its Fox’s Biscuits manufacturing sites, which will be completed at the end of the current financial year.

It has also invested in the relaunch of its Goodfella’s pizza brand. However, the impact of this has not yet delivered profitable sales growth, as trading conditions in Frozen remain “very challenging”, with the division recording a loss of £4.6m, compared with profit of £5.1m for the same period the previous year.

“Pizza’s profitability in the first half has been adversely affected by heavy promotions and lower sales in very competitive and volatile market conditions, combined with higher input costs,” reported the firm.

It said its steady transformation of its frozen pies business has continued, following the exit from a Birds Eye co-pack agreement last year. “Bringing together the marketing expertise behind our McDougalls and Holland’s brands will benefit the group, with McDougalls securing new listings ahead of the key winter period,” it added.

Within chilled, strong sales growth, up from £7.2m to £11.8m, was driven by new lines, and some new business wins, in Sandwiches and Salads.

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