Value lines lift Northern Food’s sales
A SURGE in demand for value lines helped Northern Foods beat market expectations for full year sales yesterday.
But the group’s pre-tax profit still fell 5.4 per cent to £47.5m from £50.1m the year before due to restructuring costs. And it warned on future trading due to the rising price of ingredients and pressure from competitors.
Value lines, which now account for a fifth of all Northern Food sales, helped lift group sales by 4.6 per cent to £975.2m, well ahead of analyst expectations.
But chief executive Stegan Barden said that all retailers – from Marks and Spencer to Aldi – were demanding lower wholesale prices, which would affect Northern Foods’ margins. “We’re seeing all retailers toughening up on pricing,” he said.
He added that Northern Foods would continue to focus on value lines to meet the surge in demands from retailers and consumers. It recently opened a factory to produce pizzas which retail at £1 for Asda and has also increased capacity, for example.
Citigroup analyst Eamonn Ferry said: “We view this update as positive in the context of unprecedented economic headwinds. Although the outlook is cautious, Northern Foods shares are an attractive proposition.”
The firm said 349 jobs were under threat as it launched a consultation over the closure of its Hull site, which has lost a contract to make ready meals for supermarket Wm Morrison.
FAST FACTS NORTHERN FOODS
&9679; Northern Foods supplies ready meals to Marks&Spencer and, recently, value chain Aldi.
&9679; Northern Foods’ £7m marketing campaign for Fox’s Biscuits using Vinnie the panda led to a £4.3m sales increase.