Northern Foods to sell 40 pc of business

Manufacturing News, Source : TheManufacturer.com
Published : 31 May 2006 9:31

Northern Foods has announced plans to sell a number of its businesses, accounting for 40 per cent of current group revenues.

The Leeds-based group, which makes Goodfella’s pizzas and Fox’s biscuits, has announced two profit warnings this year following disappointing sales. The group also revealed annual profits had fallen to of £45.1 million, from £62.2 million last year.

Now, Northern Foods says it will sell its distribution, flour milling, cakes and speciality bread, and chilled pastry products divisions, which is expected to amount to £200 million. The proceeds will be used to cut debt, pay interest and reduce its pension deficit.

Chief executive Pat O'Driscoll said the firm would concentrate on branded frozen foods and ready meals. "The company will be radically refocused to drive improved shareholder returns," she said. "The new group will be targeted on fewer, higher performing product categories."

"This will reduce complexity, drive improved performance, earnings and cashflow, and create a simpler, more competitive and resilient business," she added.

The firm cut its annual dividend to 4.25 pence from 9.05 pence, saying this reflected the smaller future business.

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