Northern Foods Beats Forecasts, but Profits Down

The company reported a statutory loss for the period of £17.1 million (2007/08: profit £15.0m), primarily reflecting mothballing of Fenland Foods (£22.4m) and the withdrawal of Industrial Buildings Allowance4 (£11.9m).

12/11/08 Northern Foods has reported strong sales growth, increasing total revenue by 6.8% to £468.6 million (2007/08: £438.6m) in its half year results for the 26 weeks ended 27 September 2008, with underlying revenue1 up 3.8%. Profit from operations was up 3.1% at £20.1 million (2007/08: £19.5m). Profit before tax was £16.9 million (2007/08: £20.1m), impacted by currency and pension credit changes; and investment in brands. The company reported a statutory loss for the period of £17.1 million (2007/08: profit £15.0m), primarily reflecting mothballing of Fenland Foods (£22.4m) and the withdrawal of Industrial Buildings Allowance4 (£11.9m).

The company said it was making continued progress; benefiting from actions taken over the last two years. They are well positioned in each market segment; capitalising on growth in discount sector and value products. There has been a strong performance in Bakery, with underlying revenue up 6.8%, reflecting investment in the Fox’s brand driving increased household penetration. The frozen division is well positioned for current environment, reflecting Goodfella’s number one market position; and the successful integration of the McDougall`s pastry acquisition, together with the pizza site rationalisation. Chilled improvement was continuing, with underlying sales in ready meals up 4.4% and overall profit maintained, reflecting our superior product offering in market place. There was continued full recovery of commodity cost increases during the period.

Stefan Barden Chief Executive of Northern Foods said Northern Foods is a new and much stronger company. “Over the past two years we have created a better balanced and more resilient business, which is making good progress despite these tough market conditions.”

“We have successfully responded to the current economic environment by introducing value product ranges for our customers including the discounters. Our traditional premium ranges continue to be successful and we have a good proposition across all market segments.  In these market conditions, we remain focussed upon growing our brands, operational efficiency and maintaining our strong balance sheet  We remain confident of maintaining good progress throughout the balance of our financial year whilst sharing the widely publicised uncertainty around consumer spending over the Christmas period,” he said.