Soaring pudding sales fatten profits for Northern

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The Independent Online

Soaring sales of luxurious chocolate puddings to Marks & Spencer customers fattened profits for Northern Foods.

The Leeds-based company, which supplies chilled, frozen and morning goods to M&S and the Big Four supermarkets, notched up pre-tax profits of £255.7m in the six months to the end of September.

That was 5.8 per cent better than last time after sales at its bakery division rose 6.9 per cent and it shifted 3.8 per cent more frozen food. But sales of chilled foods - pizzas, ready-meals and sandwiches - were no better than in 2004.

Pat O'Driscoll, Northern Foods' chief executive, said: "Profitability on the chilled division is not at an acceptable level." Managers at the 16 Northern factories that produce its chilled foods now report to her each week to compare performance. "You don't want to be at the bottom of that batting order on a Friday afternoon," she said. "It's not a pleasant place to be."

Ms O'Driscoll joined the company from Shell in April and quickly axed two factories, 30 managers and 1,000 other jobs to try to turn around the struggling group.

Northern has since pinched market share with its Fox's biscuits, Goodfella's pizzas and Pork Farms savoury pastries, and has landed new contracts from supermarkets.

Shares improved 11p to 155.75p yesterday but City analysts reckoned it is still too soon to say for sure whether the business is back on track. Marion Mulcahy, of Numis Securities, said: "If they can crack Christmas, then they are on the road to recovery. But we are keeping them on hold until January."

The surging cost of the energy Northern uses to run its freezers, ovens and chillers has hampered efforts to improve margins, and is forcing the company to try to lift prices. Fuel bills were £2m higher in the first half of its year.

Last month, Northern warned that bird flu was driving up the price of chicken for its pies and ready meals.