Northern Foods Q3: Chilled and bakery up, frozen down
A 17.2% slump in like-for-like frozen food sales was offset by sharp rises in chilled (+9.7%) and bakery (+5%) sales in the 13 weeks to January 1. Group like-for-like sales were up by 2.3%.
However, a new branded management team was now in place to start building “stronger brand and commercial capabilities” for frozen, said acting chief executive Simon Herrick, who has taken the helm following the departure of Stefan Barden to Brakes.
“Like-for-like sales in the third quarter were down 17.2% [in the frozen division], similar to our second quarter performance [-17.4%], reflecting the continued challenging trading conditions in UK frozen pizza and lower volumes than anticipated in pies.”
However, investment in automation at Fox's Biscuits continued to plan, with full implementation expected by the end of the financial year, he said,
“In puddings, we saw a good performance across our Christmas product range, with exceptional demand for the Heston Blumenthal `Hidden Orange Christmas Pudding'. Our Matthew Walker brand also extended its range of Christmas puddings, which were well received by consumers.”
Proposed merger with Greencore
Shareholder meetings to vote for the recommended merger of Northern Foods and Greencore are scheduled for January 31, he added, with the merger expected to complete by late March or early April subject to shareholder, regulatory and court approval.
Meanwhile, no formal offer had yet been tabled by chicken tycoon Ranjit Boparan, who has until January 21 to 'put up or shut up', he said.
“To date, we have been co-operating and providing information, but no offer proposal has been made, nor is there is any certainty that an offer will be made or of the terms of any such offer.”
City reaction
Shore capital analyst Darren Shirley said: "We have downgraded our full year 2011 expectations for frozen from a £0.5m loss to a £5.5m loss, implying a c.£1m loss in the second half. For 2012, we forecast a continuing loss of £2.5m."
He added: "In the short term, management remains comfortable with input costs, which remain in the 2-3% price range for the time being.
"Looking further in 2011/12, and particularly into the second half, management talks of pressure building to the 4-6% range if current prices remain, though the Northern hemisphere harvest [of which more news is expected in June/July], will have a large bearing on the cost outlook."
