Hundreds of jobs at risk as Uniq closes factory

Almost 400 jobs are under threat at Uniq, as the ready-meals group plans to cut costs by closing one of its three factories in its loss-making desserts division.

The Buckinghamshire-based company said it had launched a consultation with employees "about the potential closure of the Paignton site" in an interim management statement yesterday. The review of the Devon operation, which has a 390-strong workforce and makes trifles and chocolate mousse, is set to last 90 days.

Uniq will concentrate its dessert business in the two remaining sites in Evercreech and Minsterley, with the latter taking over Paignton's operations. The closure and subsequent integration will take 18 months and cost £20m, as the group attempts to slash its annual costs by £11m a year from the start of next year.

Andrew Saunders, an analyst at Panmure Gordon, warned that such site closures have been problematic in the past, because of issues with integration, the disruption to operations, and a loss of efficiency at the remaining plants.

The move is part of Uniq's turnaround programme, launched in 2005. The overhaul was initially expected to be completed this year, but the group admitted last month it would now drag out until 2010.

There was positive news in yesterday's statement regarding Marks & Spencer, one of its biggest contracts. The companies have agreed terms on a contract for Uniq to provide desserts and fish to the supermarket, as well as the "Food to Go" sandwiches contract announced last month.

The statement also updated the market on Uniq's trading during the first three months of the year. It announced that group sales were up 0.8 per cent, in line with board expectations, although it missed analyst forecasts, with Panmure's Mr Saunders forecasting 2.9 per cent growth.

The announcement comes a month after Uniq said "significantly harsher" market conditions had forced the group to scrap its dividend at its full-year presentation. The board also predicted that economic conditions would be worse this year. In 2007, the group's profits suffered from the rise in raw food prices, the wet summer and an uncertain Christmas.