UK ready meals maker Northern Foods has said it has completed its business review and is embarking on a three-year ‘Get Fit’ programme aimed at maintaining sales growth, lowering costs and raising efficiency.
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The company also reported a loss after tax of £31.0m (US$57.4m) for the first half to 2 October, compared to a profit of £19.2m a year earlier. The result included a loss of £32.1m on the disposal of businesses. Pre-tax profit before exceptional items and goodwill amortisation was £33.0m, up 1.5% from the year-ago period. Turnover from continuing operations rose 6.1% to £699.3m.
Northern Foods said that following a six-month business review it now has a three-year plan to improve its business. The review identified the company’s strengths in chilled ready meals, chilled savoury pastry products, sweet snacks and frozen pizza and pastry products, both in branded products and own-label products. Problems identified included the running of the company as a collection of small businesses rather than one big company, and an insufficient response to change – meaning the company has missed some opportunities in its markets.
Going forward, Northern said it will focus on added value convenience foods, from treats and snacks to full meals. Its target customers will remain UK and Irish retailers, and it will focus on core product areas. It has already exited a range of non-core activities including confectionery, canning, frozen foodservice, fresh chilled dairy products and fish processing.
“The fundamental objective over the next three years is to improve the management of our current businesses to reverse the decline in earnings and returns on capital. This ‘Get Fit’ programme will focus on maintaining sales growth, lowering costs and raising efficiency. At the same time, we will enhance our commercial approach and organise more effectively for performance delivery,” the company said.
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By GlobalDataNorthern said its short-term objective was to focus on the Christmas trading period, which is critical to the company’s full-year results.
“Our markets remain extremely competitive, and we face significant additional uncertainty over the trading performance of Marks & Spencer where much change is taking place, making our performance this Christmas particularly difficult to predict,” said chairman Peter Blackburn.
“Following completion of our business review, we are confident that we have the right structure and plans in place to enable Northern Foods to realise the full potential of its scale and product expertise in growing segments of the UK food market. We are committed to ensuring that this delivers value for our shareholders and customers alike,” he added.
