UK-based food producer Northern Foods has announced it plans to sell off two-fifths of its businesses as part of a "radical refocus", with final year results showing the company made a loss during the last 12 months.
The proceeds gained from the sale of certain company divisions will be used to slow down its rate of borrowing, address its pensions deficit and invest for future growth.
Final year results show that despite the company's revenue increasing 2.2 per cent to £1,438.2 million, profits of £22.8 million in 2005 have now evaporated to a loss of £5 million.
Attributing the loss to rising energy costs and an increasingly competitive environment, Pat O'Driscoll, Northern Foods chief executive, explained that businesses not sold will be simplified, with a "clear focus" on driving returns and lowering costs – especially in branded businesses.
"In the last three months we have completed our business review to make Northern Foods a more profitable and competitive business in its chosen markets," he said.
The chief executive revealed that the company would turn its attention to five key food areas, including pizza, biscuits, ready meals, sandwiches and Christmas puddings.
"The company will be radically refocused to drive improved shareholder returns. 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," Mr O'Driscoll added.
Anthony Hobson, company chairman, conceded that "major challenges" lay ahead for Northern Foods, which produces Goodfella's Pizza and Fox Biscuits, but claimed that the firm was determined "to create value for our shareholders and to ensure that we are best positioned to provide great value, quality products for our customers".