Northern Foods has indicated a very competitive trading environment in the first half, but expects profit during the period to be in line with company expectations.

The group’s trading performance will follow board predictions, with overall underlying revenue for the period down by 1.1% on the prior year. 

Northern Foods said results would reflect, in part, the declines of certain parts of the business, including biscuits and the disposal businesses. 

Northern today (10 October) provided a trading update for its half-year period ended 30 September 2006, ahead of its interim results release on 14 November.

Revenue for businesses that do not form part of Northern’s disposal programme are expaected to grow by 3.5%, the firm said.  Within these businesses, strong sales growth was achieved in its chilled and frozen divisions, which includes the pizza brand Goodfella’s. 

By contrast, revenue in Northern’s bakery division has continued to decline and overall biscuit volumes remained disappointing, partly due to the hot weather that buoyed its chilled division.
Northern Foods chief executive Pat O’Driscoll said: “The sales performance in those businesses which form the core of the group going forward has been good across the chilled and frozen divisions, and our disposal programme is progressing to plan. 

“Although achieving a step change in business performance will take time, our key improvement programmes are progressing well and successful delivery will see us emerge as a more focused and competitive business, with a strong emphasis on driving value.”
The company disposed of its chilled distribution business in August for GBP51.2m (US$95.2m), the first step towards raising an estimated GBP200m from disposals comprising approximately 40% of group revenue.  

The UK firm is looking to sell its flour milling, speciality bread, chilled pastry and cakes businesses. First half underlying sales in disposal businesses declined by 6.7%, impacted by product and site rationalisation and a fire affecting its speciality bread category.
Northern said that encouraging progress is being achieved in other key initiatives announced as part of its business review in May, with central costs on target to be reduced by at least GBP12m per annum by 2007/08. 

In August, Northern also announced the phased closure of its Trafford Park Bakery in Manchester, with the loss of 690 jobs, due to be completed by December.
The company concluded that results for the full-year will depend upon performance in the seasonally busier second half-year, and be supported by a continuing reduction of central costs.