Northern Foods hit by fall in profits

Following a period of disappointing financial performance, Northern Foods began a restructuring process in autumn 2003, which included the consolidation of 15 former operating companies into three divisions, the closure of two factories and the elimination of over 1,000 jobs.

Total costs for this turnaround programme reached £45.3m (€67m), bringing down the company's pre-tax profit to £4.3m (€6.4m), compared to last year's figure of £75.4m (€111.6m).

The poor performance of certain products resulted in a further decrease in profit by 6.7 per cent compared to last year.

Underlying operating profit in the chilled division was particularly disappointing, falling 19.2 per cent to £35m (€52m) after some products, including meal solutions and pastries, failed to meet expectations.

This disappointing performance was offset by good results from products such as sandwiches and pizzas, while the Fox's branded products, such as Fox's biscuits, demonstrated an 11 per cent sales growth.

"The significant changes that we have made during 2005 have given Northern Foods a sound platform from which to move forward,"​ said chairman Peter Blackburn.

The group claimed to have improved its previous troubled relationship with main customer Marks & Spencer, highlighting the success of its M&S Melting Middles chocolate pudding. Stronger growth was reported with other major customers, such as Tesco and Asda.

Chief executive Pat O'Driscoll said the company was taking fast and decisive action in order to address the challenges of a difficult operating environment. "We have to accelerate the pace of change to meet our strategic targets in an increasingly tough marketplace. In the coming year we will therefore focus our efforts in two key areas: driving sales growth and reducing costs across the supply chain."​

The company has now embarked on a three-year programme to become the supplier of choice to UK and Irish retailers in added value convenience foods.