Australian frozen food group Patties Foods has booked a drop in first-half earnings as margins came under pressure from "increased discounting" in the country's grocery market.

The company said reported net profit fell to A$8.8m (US$7.9m) for the six months to the end of December, down 3.3% year-on-year. Underlying profit was down 7.5%, the group added. Margins were "slightly reduced" by "some pressure" in the frozen fruit and Nanna's Fruit Pie category from "increased discounts".

Sales at the firm were negatively impacted by the loss of a "major" private-label frozen fruit contract. However, that was more than offset by an 8% lift in branded sales. Total sales were up 0.9% to $126.5m, Patties revealed.

Looking to the remainder of the year, the group predicted second-half net profit would "at least match" the corresponding period last year.

The bottom line will benefit from the recent introduction of automated packing capabilities as well as new product launches and cost control.

Click here to view the ASX filing from Patties.