Northern Foods Sales Meet Forecast Following Price Increases

By Eleanor Green

July 28 (Bloomberg) -- Northern Foods Plc, the largest U.K. maker of prepared meals, said first-quarter sales met forecasts after the company passed on surging costs for ingredients through price increases.

Revenue rose 7.6 percent in the 13 weeks to June 28, the Leeds, England-based company said today in a PRNewswire statement, as average selling prices increased by 5.5 percent, offsetting a 2 percent decline in sales by volume.

Northern, the maker of Fox's cookies, maintained its forecast for annual sales. Surging expenses for wheat, milk and other commodities have raised costs across the food industry, pushing producers to negotiate higher prices with retailers. At the same time, a slowing economy has hurt food sales at Marks and Spencer Group Plc, which generates about a quarter of Northern's revenue, according to Citigroup Inc.

``The market environment remains challenging but we continue to invest in our brands and own label business, and at the same time drive greater efficiencies,'' Chief Executive Officer Stefan Barden said in the statement. ``We have a strong balance sheet and a robust business model, leaving us well positioned to succeed in difficult market conditions.''

To contact the reporter on this story: Eleanor Green in London egreen15@bloomberg.net.