Bakery sales continue to struggle for Northern Foods

By Karen Willmer

- Last updated on GMT

Related tags Northern foods Net income

Northern Foods today reported a 2.6 per cent decline in bakery
sales revenue in the 13 weeks up to 30 June.

This follows the 5.1 per cent decline in bakery sales revenue for the financial year to 31 March 2007. The company said in an interim statement for the quarter ended 30 June that it was focusing on managing increases in commodity costs, which continue to affect the bottom line in all segments of its business. Excluding the impact of currency rate changes, and discontinued operations and brands, the company as a whole increased revenues by 2.6 per cent for the quarter. Only bakery revenues declined, while other segments grew. However the overall margin for the period rose compared to the same period last year, and the company has reduced its debt and interest payments, said Northern Food's chairman Anthony Hobson. "Trading conditions have remained challenging and the management of increases in commodity prices remains a key focus,"​ he said. However, Hobson said overall company trading was in line with expectations for the first 13 weeks of the current financial year, and revenue performance by business was consistent with recent trends. Throughout the previous year, Northern Foods has streamlined the bakery segment due to its poor performance, and market analysts were speculating earlier this year whether it would sell the biscuit segment altogether. The company denied the rumours but admitted to be struggling to hold on to its 11 per cent share of the UK biscuit sector. Northern Foods, which owns Fox's and Rocky brands, said today a better focus on marketing its biscuit brands and the withdrawal from unprofitable segements helped stabilise revenue. The company completed the disposal of its chilled pastry, cakes, speciality bread and flour milling businesses in January in a bid to stabilise the revenue. The UK biscuit market is worth £1.87 billion (€2.7bn) annually. Sales revenue for the chilled segment grew by 5.2 per cent and frozen foods by 1.1 per cent. Hobson said that within the chilled segment strong sales in ready meals offset the slower growth of the sandwiches and salads, which he said was the result of "unseasonable" weather. He also noted particularly strong performance of Goodfella's frozen pizza brand. "Although we have still much to do, we are making progress in realising the potential of the business,"​ Hobson added. In the financial year ended 31 March 2007 Northern Foods' recorded revenues of £888.5m.

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