Bakery unit spurs strong half at Northern Foods

by Eric Schroeder
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LONDON — A strong second quarter, led by solid performance in the company’s bakery business, fueled 3% like-for-like sales growth at Northern Foods P.L.C. in the first half ended Oct. 2.

The company’s bakery division in the first half had underlying revenue growth of 3%, driven by an 11% gain in revenue during the second quarter.

“Biscuit volume growth returned to normal levels following our decision to return to promotional activity after the World Cup,” Northern Foods said in an Oct. 5 trading statement. “These actions helped maintain strong divisional margins. Our major investment in new automated production technology at Fox’s Biscuits is proceeding to plan and will further strengthen our competitive position in the second half and next financial year. In Puddings, we have a good Christmas order book for both our Matthew Walker brand and own label offerings.”

The company’s chilled division was another strong first-half contributor in posting underlying revenue growth of 15% in the first half and 16% in the second quarter.

Frozen underlying revenue, meanwhile, fell 21% for the first half and 16% for the second quarter.

Additionally, Northern Foods announced a new organizational structure that will split the company into two divisions: Branded, which will comprise Goodfella’s Pizza, McDougalls and Holland’s Pies, Fox’s Biscuits and Matthew Walker Puddings; and Chilled, which will combine sandwiches and salads with ready meals and the company’s British Airways supply business.

“This new structure will further streamline the business, focus management expertise and drive performance improvements and cost savings, which will pay back by the end of 2011,” the company said. “The associated restructuring charge of up to £6 million will be taken in the second half of this financial year.”

Graham Hunter, managing director of Fox’s, has been put in charge of the branded business.

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