UK meat group Bernard Matthews Holdings has returned an operating profit on continuing operations in 2008, thanks in part to falling costs, despite a fall in annual turnover.

Bernard Matthews said group sales for the year fell by 3.8% to GBP335.5m. Pre-exceptional operating loss narrowed to GBP1.5m from a 2007 figure of GBP15.9m.

However, turnover from continuing operations increased by 2.6% to GBP335.1m and operating profit before exceptional items from continuing operations swung to GBP857,000 from a loss of GBP9.6m in 2007.

Losses from discontinued operations were GBP2.3m in 2008 compared to operating losses of £6.2 million in 2007.

Overall, the loss before tax fell to GBP4.4m compared to GBP77.2m in 2007.

Bernard Matthews' chief executive Noel Bartram said: "I can report that, after a couple of difficult years, the company returned a small profit in 2008. The strategy that the management is implementing has started to bear fruit against the backdrop of a challenging retail environment and higher input costs."

Bartram added: "In 2008 we went back to our agricultural roots focussing on British turkey farming and providing quality, great tasting and affordable food. This, combined with initiatives to reduce operating costs, means we are now well positioned to concentrate on building upon the strengths of the business and accelerating the recovery that is already under way.

"Sales in the current financial year are steady but the trading environment remains difficult with consumers continuing to be cautious and retailers competing on price to retain footfall and market share."

Bernard Matthews said the improvement in the results was due to a better performance from the UK business, against a background of significantly higher feed prices and other input costs and the considerable deterioration of the UK economy in the latter part of 2008.

The group said initiatives to reduce costs had delivered significant savings in 2008, and it expects further upside in 2009.

The improvement in the UK was to some extent offset by the performance of the company's Hungarian subsidiary, which suffered from a combination of high feed prices, and relatively low commodity meat selling prices. However, the implementation of a cost improvement programme is anticipated to improve the performance for 2009, the company said .

The group's German subsidiary continued a recent trend of delivering steadily improving sales and operating profit.

The company also announced some changes to its management structure as part of which Bernard Matthews will retire as a director from the holdings board upon his 80th birthday in January.

He will remain chairman of the recently established supervisory board. David McCall, who is currently a non-executive director, will be appointed non-executive chairman of the holdings board. Michael Lunn has joined Bernard Matthews holdings board as non-executive director.