Northern Foods Gets Fit

By Anita Awbi

- Last updated on GMT

Related tags Northern foods Meal Food

Britain's Northern Foods has posted a first-half profit rise of 5.8
per cent, following the introduction of a company-wide 'Get Fit'
streamlining campaign to drive profit margins and rationalise

Pre-tax profits and exceptional items rose to £25.7 million in the 26 weeks to October 1, up from £24.3m in the same period last year, as the company fought to weather the difficult trading environment.

As one of the UK's largest food producers, Northern Foods supplies all the major supermarkets including Asda, Tesco and Marks and Spencer with ambient, frozen and chilled products.

But last year's disappointing performance, resulting in a profit loss of £7.9m, prompted the manufacturer to adopt a 'Get Fit' efficiency drive.

The bakery division has since posted a 6.9 per cent increase in sales, as Fox's became the UK's number two biscuit brand, and the frozen division delivered a 3.8 per cent increase, as the Goodfella's frozen pizza range remains the market leader.

Although frozen and ambient key brands are performing well the company has continued to see flat sales in its chilled food division despite attempts by the new CEO Pat O'Driscoll to turn the business around.

A 9 per cent decline in ready meal sales was offset by a 13 per cent rise in fresh pizza and sandwich sales, but Driscoll says this performance level is unacceptable - piling pressure on the division to turn its fortunes around.

She introduced a raft of new measures to streamline the ailing sector earlier this year, axing two factories, 30 management posts and 1,000 other jobs. This created a cash outflow of £23m.

O'Driscoll told Reuters she now has high hopes for the division, saying: "It's a business with fantastic consumer dynamics around people wanting health, convenience and indulgence. We can do that."

A recent multi-million pound deal with Asda is likely to encourage much needed growth in the ready meal sector, and will see the company supplying value orientated convenience foods through the Cavaghan and Gray subsidiary of Northern Foods, following an 18-month tender process.

The £30m deal will create 180 new jobs.

"We're very excited about the new Asda ready-meals contract and we've got new launches in the cream cake area,"​ O'Driscoll added, indicating an imminent revival of the chilled food sector.

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