US food processor Birds Eye Foods has reported a first-quarter net loss of US$0.2m, compared to a net profit of $2.87m a year earlier.

The company said net income was impacted by volume declines as well as continued investments in merchandising and advertising.

Net sales for the three months to 25 September were $177.3m, down from $189.7m in the first quarter of the previous year. The decline reflects the volume impact of a price increase taken during the quarter on most product categories to offset higher costs of labour, raw materials and packaging.

"Consistent with others in our industry, we have experienced significantly higher product costs for some time. These cost increases prompted our recent pricing action. This action had a short-term volume impact in the first quarter," said chairman, president and chief executive Dennis Mullen.

"These cost increases, along with higher costs associated with certain crop shortages this summer, will continue throughout fiscal 2005. However, we expect that our pricing actions, and the benefits of our continued marketing investments will strengthen future results. We also are confident that our recent acquisition of the C&W brand has increased our existing product portfolio. Overall, we are continuing to focus on the introduction of value-added products and innovative meal solutions targeted to meet the growing demands for convenient and healthy food products," Mullen added.

Rochester-based Birds Eye Foods processes fruits and vegetables in 14 facilities across the country. Its frozen food brands include Birds Eye, Birds Eye Voila!, Birds Eye Simply Grillin', C & W, Freshlike and McKenzie's. Other processed foods marketed by the company include fillings and toppings (Comstock and Wilderness); chilli and chilli ingredients (Nalley and Brooks); salad dressings (Bernstein's and Nalley) and snacks (Tim's and Snyder of Berlin).