A contract with US retail giant Safeway has helped drive a rise in annual sales and earnings at US frozen food firm Overhill Farms.

The company said on Friday (12 December) that net income for the year to 28 September more than doubled to US$10.3m.

Operating income jumped 73.2% to $20.6m, while net revenue reached a record $238.8m, a rise of 24%.

Overhill's retail sales were up 52.1% to $174m, thanks largely to a clutch of private-label products it makes for Safeway.

Chairman, president and CEO James Rudis said Overhill's relationship with Safeway was lucrative for the business.

"Our relationship with Safeway is becoming increasingly valuable to us with the continuing success of the Eating Right line, the roll out of a second product line, and the development of the Better Living Brands product line," Rudis said.

Overhill's buoyant retail sales helped offset falling sales in the foodservice channel. The company saw revenue from its foodservice business fall 24.6% during the year to $44.1m.

The company saw its sales in the airline channel rise 5.1% to $20.7m but said cost-cutting in the industry meant it did not see the business as a "growth sector".

Overhill warned that it expects sales in its current fiscal year to be hit by HJ Heinz's decision to make more of its frozen food products in-house.

The company said Heinz's move would reduce revenue by $19m and added that it is in talks over future contracts with the food giant.

However, Rudis said that Overhill had $20m of new business to offset the reduction in business with Heinz.

"We believe our prospects for new business, both near-term and beyond, are strong," Rudis said.