Weak bakery sales force Northern Foods to refocus

By staff reporter

- Last updated on GMT

Related tags Northern foods Cent Bread

Northern Foods reported a drop in bakery sales this week with the
sector falling 6.6 per cent from 18.6 per cent after a
disappointing performance for the quarter ended 30 September.

Operating profit also suffered in the 26 weeks, falling by 26.7 per cent from 38.4 per cent and margins also dragged down by 3.9 per cent

The UK-based company continues to shed underperforming units such as chilled pastry, cakes, speciality breads and flour milling as revenues dropped to £683.2m (€1,007m) in the quarter from £700m (€1,032m).

The non-core bakery businesses that operate in lower margin categories or need restructuring, all of which represent about 40 per cent of current revenue, will be jettisoned by the company in a bid to restore performance.

Sales of the targeted businesses will generate revenues of £200m (€294.8m), the company said. The money will be used to reduce debt and fund pension liabilities. The rest will be used to invest in growing the business.

Northern Foods plans to reduce central costs by £12m (€17.7m) per annum by during the next fiscal year.

Pat O'Driscoll, the company's chief executive described the current financial year as one of transition for the company as it attempts to boost margins by refocus the business around higher performing categories.

"Our improvement programmes are progressing to plan and our strong focus on cash generation will deliver significant incremental value,"​ said O'Driscoll.

The company's chilled and frozen division was one of the better performing categories. Sales in the division were up 10.3 per cent during the quarter compared to 9.3 per cent the year before.

Northern Foods' brand successes include Goodfella's Pizza, which had about £100m (€147.4m) in retail sales during the last 12 months and increased its share of the market to 30 per cent.

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