A fall in profits from its frozen and bakery divisions has weighed on full-year earnings at Northern Foods, the UK company said today (30 May).

Northern Foods, maker of brands including Fox's biscuits and Goodfella's pizzas, posted flat underlying operating profits of GBP58.2m (US$115.1m) for the year to the end of March. Revenue rose 3.1% to GBP888.5m.

Northern Foods has sold off 40% of its business in the last year and, including the impact of disposal costs, the company made a loss of GBP22.5m.

The company said that its biscuits business had "under-performed" as rising raw material costs hit earnings.

Northern Foods saw a mixed performance from its frozen business. Nevertheless, growth from the company's pizza brands failed to offset its struggling pastry and meat grill units. Underlying operating profit from the company's frozen unit fell 17%.

Northern Foods, which makes sandwiches and ready meals for Marks & Spencer, derived some comfort from its chilled business. Rising sales and cost cuts drove soaring profits from the company's chilled business, while its sandwiches and salads drove a 7% rise in revenue.

Chief executive Stefan Barden insisted the company had made "real progress" over the last 12 months.

He added: "This year will see further progress in the transition of the group. We expect to see continued opportunities for revenue growth and improved performance, particularly in the attractive Chilled markets. However, challenges remain, especially in biscuits, where we are experiencing a sustained increase in input costs."