Northern Foods has confirmed that it will deliver full-year operating profit in line with market expectations having traded “solidly in tough market conditions”.

In an update today, the UK food group said like-for-like sales for the year to 3 April increased by 1% on the prior year, despite 1.8% fall in the fourth quarter.

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Annual underlying revenue was up 1%, reflecting volume growth of 1.8%. The 1.8% reduction in group underlying revenue for the fourth quarter reflected the rationalisation within the company’s frozen division to enhance profits, it said.

Chilled foods, Northern Foods said, maintained a good underlying performance, with annual underlying revenue ahead by 6.3%, driven by the sandwiches and salads business. Underlying revenue was up 2.1% during the fourth quarter.

However, profits at its ready meals business was impacted by investment and tough trading conditions, the company said. Nevertheless, Northern added that it had a clear action plan to strengthen its position within this market.

“In March, we commenced the phased start of a long term contract to supply British Airways on its short-haul routes from London Heathrow, using a new dedicated facility with our partner DHL. We also secured new sandwich business with Costa Coffee, which will commence during the second quarter of our new financial year,” it said.

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In bakery, annual underlying revenue was up by 3%; fourth-quarter underlying sales rose 4.1%.

In frozen food, Northern said its strategy to exit low-margin business and eliminate complexity resulted in higher margins and increased profits. However, annual underlying sales fell 9.3%. In the fourth quarter, underlying revenue fell 11.7%.

Stefan Barden, chief executive of Northern Foods, said: “Northern Foods continues to trade solidly, in tough market conditions, with strong trading in sandwiches and salads, and bakery. We will deliver full-year operating profit in line with market expectations.

Meanwhile, Northern also confirmed that it was in discussions with a customer about our joint business plan at its Swansea factory, which may result in an impairment charge in this year’s financial statements.

“No assessment of the value of any provision can be made until the conclusion of these discussions,” the company said.