Comeback for ready meals at home lifts Northern

During the recession many consumers spurned ready meals in favour of cooking from scratch, but the Leeds-based company said the ready meals market saw sales leap ahead by six per cent in the first three months of 2010.

Chief executive Stefan Barden said people were realising that they could not make a meal at home for the same quality at the same price in so little time.

"Those people who have a job are a bit more secure than they were a year ago," he said. "They have also realised that scratch cooking isn't all it's made out to be. It takes a lot of time and effort."

Northern makes a wide range of ready meals from cottage pie and casseroles to Chinese and Indian for customers such as Marks & Spencer and Sainsbury's.

Yesterday the group said that full year operating profits should meet analysts' forecasts of around 54m.

Northern said that strong demand for sandwiches, salads and biscuits offset tougher trading in ready meals last year.

The company, which also makes Goodfella's pizza and Fox's biscuits, said like-for-like sales fell by 1.8 per cent in the 14 weeks to April 3 due to the planned exit from the low-margin frozen business.

The group has rationalised its frozen pizza and pie business, withdrawing from areas that were not profitable enough.

Underlying sales for the year rose by one per cent, reflecting volume growth of 1.8 per cent.

Mr Barden said that the group continued to trade solidly in tough market conditions.

Northern's Fox's brand moved into second place in the biscuits market with a 10.7 per cent share.

According to industry figures, the label is ahead of Nestl and Wagon Wheels firm Burton's. United Biscuits is the market leader.

Fox's has seen a revival in its sales performance after a television and online advertising campaign based around cartoon character Vinnie, a cross between a panda and a dog.

Northern said bakery sales rose 4.1 per cent in the past 14 weeks, leading to a three per cent rise for the financial year.

The change in strategy in frozen foods meant revenues for the division were down 11.7 per cent in the quarter and by 9.3 per cent over the year.

The group recently secured a long-term contract to supply British Airways on its short haul routes from Heathrow.

Mr Barden said Northern had seen no real impact from the BA strikes as it was still making the breakfasts and meals for the flights whether they are cancelled or not.

The group announced a new sandwich contract yesterday with cafe chain Costa Coffee which will start this summer.

There was no news on the future of the biscuit factory at Batley. A final decision on whether to site the biscuit factory in Uttoxeter or a site in West Yorkshire has been delayed until next spring.

Charlie Menegatos, senior trader at Accendo Markets, said he sees Northern Foods as a buy on the basis of the group delivering a full year like-for-like sales rise before the exit from the low- margin frozen business.

The company said that net debt had fallen by almost 10 per cent, which implies it has fallen to around 190m, down from the previous 207m.

Goodfella's gets promotion

Northern Foods hopes to grab a bigger slice of the frozen pizza market with a campaign to revive its flagging Goodfella's pizza brand.

Industry consolidation and fierce competition have seen the group's frozen pizza sales lose ground to rivals but Northern is launching the multi-million pound television, print and internet campaign to transform Goodfella's into a "master brand".

Northern has seen its Goodfella's market share slide about 10 per cent in the face of a sustained assault by German food manufacturer Dr Oetker, which has its UK arm based in Leeds.

The UK frozen pizza market is worth about 380m.