H1 sales up, but operating profits down at Northern Foods |
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Tue, 11 Oct 2005 06:05
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LONDON - Ready meals and pastry group Northern Foods has admitted that the ongoing bird flu scare was increasing the cost of chicken for its pies although first half sales were adequately healthy.
The group said that the tough trading conditions had more than accounted for all the gains that it had made from the restructuring process, but reported that the underlying year-on-year sales for the first six months ending October 1 were up by 3.4 percent as compared to last year.
"A challenging trading environment and significant inflation in input costs have offset the gains from the group's procurement and efficiency programmes," Northern Foods said in a trading update.
Pat O'Driscoll, the chief executive warned that the company had work harder if it is to recover lost ground in the second half. It may be recalled that Ms O'Driscoll had joined the company from oil giant Shell in March this year.
The UK's largest maker of chilled foodstuffs did say that operating margins are broadly on target for the 26 weeks ending October 1. "As has been well documented, the trading environment remains tough and we will need to recover further input cost inflation in the second half of the year, particularly in utilities," Pat O'Driscoll observed. In an attempt to become more cost-effective, Northern Foods is culling 1,000 jobs and reducing the number of operating units to four from nineteen.
In the backdrop of the falling margins, Northern Foods shares dipped 1.6 percent to 149-1/2 pence valuing the company at £740 million, in early morning trading on the markets. The company joined other firms like Next, B&Q, MFI and Woolworths who have already warned that the tough conditions have had an impact on their balance sheets.
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