Northern Foods cuts cheaper lines

Northern Foods said it had passed on rising costs to retailers.

Northern Foods, the maker of Fox's biscuits, says it has continued its move away from less profitable goods to faster-growing markets.

The company will focus more on developing products such as Goodfella's pizzas where profit margins are higher. The firm said it was coping with rising food costs, with its average prices up 2.4% as it passed the higher costs of ingredients to retailers.

Northern said its annual profits would be at the top end of expectations.

The company said that its frozen food prices had risen by 5.1%, and its bakery division, which makes biscuits and desserts, saw prices rise by 7.5%.

"We are operating in a volatile trading environment with inflationary commodity prices," chief executive Stefan Barden said in a trading statement.

"We will continue to eliminate low margin and low volume products from our range."

Northern Foods will also stop making some own-brand foods for supermarkets as the contracts are "unprofitable", the company said.