Northern Foods targets pizza market as profits increase 10.6% to £111.7m

Major growth in sales of Green Isle frozen pizzas is being sought in Ireland and the UK following the recent completion of a £16 million (€20.3 million) two-year capital investment by parent group Northern Foods.

The investment has nearly doubled the potential output at its Naas Road site.

The new plant produces Italian-style thin and crispy pizzas complementing the American-style deep pan pizzas made at the existing facility. New products are being introduced in the Irish and UK market under the Goodfella's brand to try to repeat Green Isle's remarkable expansion that has lifted its annual turnover above £100 million with strong growth in exports to the UK. Higher sales and operating profits at Green Isle played a significant role in enhancing turnover and profits at Northern Foods in the 12 months to the end of March. Overall, the group's operating profits increased 10.6 per cent to £111.7 million on sales up 17.3 per cent at £1.28 billion. Profits before tax and exceptional items were only £0.2 million higher at £94.5 million due to a £10.5 million increase in interest charges as a result of acquisitions and record capital spending, including the continuing investment at Green Isle. Lord Haskins, chairman, said the group had achieved "a robust underlying performance against a difficult market background despite the short-term costs of our capital expenditure programme.

"We have a made a solid start to the new year in a competitive market place. Our investment programme, designed to further improve our productivity and innovation, will yield increasing benefits as the year progresses." The Green Isle business had "performed well" in 1998-99, maintaining brand leadership for Goodfella's in the expanding UK frozen pizza market. Batchelors, the "Barney and Beaney" canned foods business in Ireland also owned by Northern Foods, "also made progress," said Lord Haskins.

Detailed financial figures are not disclosed for Green Isle and Batchelors. But the group's annual results detail significant gains achieved by its European activities that mainly comprise the two Irish operations together with a small biscuit-making business in Holland.

Operating profits earned by European activities rose by 10 per cent to £16.5 million on turnover up 15 per cent at £176 million. Most of the uplift in profits and sales came from the Green Isle pizza business. Total dividend payments are 6.3 per cent higher at 6.8p, still well covered by underlying earnings per share up 0.6 per cent at 12.6p.