Northern Foods releases trading update
today reported adeclined by 1.1 per cent in overall operating
revenue for the group during the first six months ofthe year,
compared to the same period in 2005.
Meanwhile underlying revenue for businesses not forming part of the company'sprogramme to sell off underperforming units grew by 3.5 per cent, the company reported.
As part of a drastic restructuring plan, Northern Foods is now focusing on sixof its most profitable sectors - pizza, biscuits, ready meals, sandwiches and Christmas puddings.
"The sales performance in those businesses which form the core of thegroup going forward has been good across the chilled and frozen divisions, and our disposalprogramme is progressing to plan," stated Pat O'Driscoll, the company's chief executive.
The company reported strong sales in the sandwiches and salads segments of thechilled division, while there has been continued market share gain by Goodfellas in frozen pizzamarket.
In contrast bakery sales are on the decline, due largely to the hot weather,Northern Foods claims.
The company's sale of its chilled foods distribution business was completed inAugust for £51.2m and was the first step in raising an estimated £200m from disposals. The companyplans to sell off its flour milling, speciality bread, chilled pastry and the cakes business.
The company noted that the businesses slated for disposal suffered a salesdecline of 6.7 per cent during the first half of 2006. The fall was attributed to the impact ofcutting product offerings and consolidating plants. A fire at a speciality bread plant also hurtsales.
O'Driscoll also says Northern foods is on track to meet its key targetsoutlined in a business review of March 2006. Central costs are on target to be reduced by £12m perannum by 2007/8.
The company has launched a programme to tighten cash and capital managementsystems. The programme is showing signs of early success, with seasonal working capital improvingand a reducing in capital spend, O'Driscoll claimed.
Leeds-based Northern Foods is one of the UK's leading food producers with aturnover of £1.45bn. The company has leading market positions in a number of key growth categoriesincluding ready meals, chilled savoury pastries, snacks, frozen pizza and pastry products.
