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Northern Foods hit by high energy costs and bird flu outbreakPosted by Retirement on: 2005-10-10 20:47:08 in category:
Stocks & Securities [ Print | Permalink / 0 Comment(s) ] By Rachel Stevenson Published: 11 October 2005 Northern Foods, which supplies ready meals for supermarkets such as Marks & Spencer, Tesco and Asda, warned yesterday that trading conditions remain tough and high energy costs were hampering attempts to improve margins. The company said rising energy bills are stalling the effects of a restructuring and cost-cutting exercise across the business, designed to combat the squeeze in prices demanded by the supermarket industry. Northern Foods also said that the outbreak of bird flu was pushing up the price of chicken for its pies and ready meals. Jez Maiden, who joined as finance director in the summer, said: "We have seen some impact from the uncertainties over avian flu, and that has tended to push up the price of the chicken we buy in the UK. We are also seeing protein producers suffering from the rising price of energy." Since taking over as chief executive last year, Pat O'Driscoll has sold off two factories, culled 30 management posts and 1,000 other jobs to try to improve operating margins. The group's 15 operating divisions have been narrowed to four and a new centralised purchasing system has been installed. Mr Maiden said: "We are making good progress on the internal programme and the business is coming into shape nicely. The only fly in the ointment is higher energy costs, which will continue in to the second half of the year. The benefits of our greater efficiencies have gone into offsetting these costs, whereas we would rather see them improve operating margins. In the short term, we are being held back by these rising costs." The company reported a 3.4 per cent increase in sales over the first half of the year, with performance of its cakes and pies unit and its frozen businesses robust. It said that its chilled food division was beginning to show progress after its transition in to a unified business. But shares in Northern Foods fell 4p to close at 148p after it said first-half operating margins would be "broadly maintained". This has disappointed investors, who had hoped to see some improvements from the action taken by the company to reduce costs. Nicola Mallard, at Investec Securities, said: "With most people expecting margin progress for the full year, it would have been better to see some display of this in the first half." Homepage Other open community sites http://www.business-business.biz Please support our sponsors: To design your custom retirement plan. http://www.retirement-plan.us For planning IRA rollovers. http://www.ira-rollover.us Professional asset allocation and the wonders it can do. http://www.asset-allocation.us Professional money management- Nationally ranked performance. http://www.roth-ira.us Managers selected to fit your needs. http://www.money-managers.us |
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