Northern Foods hit by contract withdrawals

The Leeds-based company, which makes own-label products for retailers as diverse as premium food seller Marks & Spencer and discounter Aldi, said on Tuesday comparable sales were down 1.6 percent in the quarter to July 3 compared with the year before.

Northern Foods, which is Britain's biggest seller of Christmas puddings and supplies food to British Airways, stopped making Birds Eye frozen pies in June last year and closed a ready meals factory in Swansea in April this year after failing to agree a contract with J Sainsbury.

The company, which also makes Goodfella's pizza and Fox's biscuits, said it expected trading conditions to remain challenging but is continuing to invest in its brands and technology in order to drive future earnings growth.

Stefan Barden, chief executive of Northern Foods, said: "We are focused on a range of initiatives to enhance the competitive position of the group and to drive growth, with increased investment in brands, talent

and technology in the first half year.

"With a strong financial position, Northern Foods remains well positioned going forward."

Shares in Northern Foods closed on Monday at 46.75 pence, valuing the business at 216 million pounds.

They have underperformed the UK food producers' index by about 29 percent since the start of the year.