Northern Foods said today that bird flu is responsible for pushing up costs as sales rose 3.4 per cent in the first-half of the year.
The company, which owns Green Isle in Ireland, said the tough trading environment and rise in costs had offset gains from its turnaround programmes.
"We've seen some impact from the uncertainties over avian flu, and that tended to push up the price of chicken we buy in the UK," finance director Jez Maiden said. "And also you're seeing the protein producers suffering the rising price of energy themselves."
Avian flu has killed 65 people and millions of birds in Asia since 2003. Romania and Turkey began culling hundreds of birds over the weekend, raising fears the disease could be spreading across Europe.
Chief Executive Pat O'Driscoll, who joined last April, has closed two factories and cut 30 management posts and 1,000 other jobs as she seeks to turn the ailing food group around.
Northern Foods shares fell 1.6 per cent to 149-1/2 pence this morning, valuing the group at around £730 million.