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November 11, 2008

UK: Northern Foods posts drop in H1 profits

UK food group Northern Foods today (11 November) posted a 16% drop in six-month pre-tax profits due to adverse currency movements and investment in its brands.

UK food group Northern Foods today (11 November) posted a 16% drop in six-month pre-tax profits due to adverse currency movements and investment in its brands.

For the 26 weeks ended 27 September, pre-tax profits fell to GBP16.9m (US$26.7m) from GBP20.1m in the previous year.

Revenue increased by 6.8% to GBP468.6m (GBP438.6m), with underlying revenue 3.8% ahead.

Underlying revenues from the bakery division rose 6.8%, reflecting the benefits of a GBP5m TV advertising campaign for Fox’s biscuits.

However, Northern posted a statutory loss for the period of GBP17.1m due to the mothballing of its Fenland Foods manufacturing site and the withdrawal of Industrial Buildings Allowance.

“Northern Foods is a new and much stronger company,” said chief executive Stefan Barden. “Over the past two years we have created a better balanced and more resilient business, which is making good progress despite these tough market conditions.”

The company’s chilled division delivered a “resilient” performance during the period with revenue up 4.5% to GBP239.7m and profit from operations reaching GBP9.9m from GBP9.6m in the previous year.

Revenue performance in the frozen division was “robust”, with Northern’s Goodfella’s pizza brand retaining its number one position in the category. Revenue was 11.5% ahead at GBP131.3m.

However the impact of the stronger euro on the company’s Irish manufacturing base impacted overall profitability by GBP2.5m. As a result, profit from operations fell from GBP5.5m to GBP3.7m.

Northern’s bakery division, meanwhile, reported an improved performance, with revenue up 6.8% to GBP97.6m and profit from operations up 47.7% to GBP6.5m.

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