UK: Northern Foods makes gains

Leeds / UK. (nf) British food manufacturer Northern Foods PLC says that its trading performance in the first half of 2007 has continued to be in line with its expectations.

The Leeds, England-based company noted that its underlying revenue rose 2,6 percent over last year. On a divisional basis, underlying revenue in the Chilled business showed continued growth with sales increasing above 5,4 percent from the prior year.

Northern Foods´ ready meals volumes grew strongly and its Sandwiches + salads also performed well, despite slower year-over-year growth due to the unseasonably poor summer weather.

The company says its Bakery division returned to sales growth in the first-half, by reporting a 2,8 percent increase in the underlying revenue. During the period, the company´s biscuit sales volumes increased, with higher own label volume. The company also launched The Pudding by Matthew Walker, a new premium branded offer for this Christmas.

In the Frozen division, underlying revenue declined 2,6 percent from the previous year. While, Goodfella´s pizza continued its robust performance in the first-half, Dalepak meat grills business showed weak performance due to the adverse impact of poor barbeque season. The company says it is implementing restructuring actions to reduce the cost base significantly in this division, supported by the launch of a new George Foreman premium grilling range.

Northern Foods, however, warns that significantly higher commodity costs expected for the remainder of this financial year, will result in material costs of about four to five percent higher than the prior year, representing an annualized impact of about eight to ten percent.

Matching with current market trends, commodity prices have continued to grew during the last three months, especially in cereals, dairy, cocoa and fats, reflecting difficult global market conditions and constrained UK supply. Despite this, the company says it has made good progress in the period (press release).