Northern Foods plc (NFDS.L) said Wednesday, in its Interim Management Statement for the third quarter, that its trading was in-line with market expectations, subsequent to "a solid Christmas trading performance."
The group's year-to-date like for like sales, which the company defines as underlying revenue which excludes the impact of currency rate changes, product categories no longer manufactured, acquisitions and discontinued operations, was up 1.9%, thanks to growth in Chilled and Bakery. However, its third-quarter like-for-like sales was flat year-over-year, reflecting the planned exit from marginal Frozen pastry contracts to enhance margins.
Northern Foods also informed that it reduced net debt by 17% year-over-year. The company has also invested in brands to build key market positions. Important steps were implemented to position the business for growth and be placed for next fiscal, the company said.
Group underlying revenue rose 1.9% year-to-date, with volume growth of 2.7%. In the third quarter, the company's underlying revenue was up 0.1%, primarily reflecting the exit from Frozen pastry contracts to enhance margins, announced earlier.
Chilled underlying revenue rose 5.4% year-over-year, and also witnessed growth in Sandwiches and Salads, reflecting new discount lines and new business wins. However, profitability was affected by performance of Ready Meals, reflecting lower volumes following its Hull factory closure. Bakery saw good seasonal demand during the key Christmas trading period, with strong divisional margins.
In Frozen, the group said it is on track to build its bottom line by eliminating low margin sales, simplifying manufacturing footprint and investing in McDougall'spie brand, with the roll-out of individual pies starting during the period. This led to 10.5% year-over-year decline in underlying revenue before currency.
The UK-based group is engaged in food production and manufactures a mix of own label and branded products for retailers.
"Northern Foods has delivered a resilient Christmas trading performance. Market conditions remain competitive but at this stage of the year, our sales and profit expectations for the current financial year remain unchanged and in line with market expectations. With a strong balance sheet, we are well placed going forward," commented Stefan Barden, Chief Executive of Northern Foods.
NFDS.L is currently trading at 66.95 pence, on the LSE.
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