Northern to sell 40% of its business
MORE THAN 2,800 meat workers' jobs are at risk after Northern Foods announced plans to offload 40% of its operations
. The manufacturing giant has announced a root and branch pruning programme with a mega boot sale of its pork pie and sausage roll operations, along with NFT, the distribution business and its flour, cakes and bread businesses.
Pre-tax profits plunged 28% to £45m in the year to March. After tax and one off hits for restructuring, Northern slipped into a loss of £5m, and boss Pat O'Driscoll warned that current fiirst half trading to September would be weaker still. The businesses being sold account for 9,000 of Northern Food's 20,500 employees, or 15 of Northern's 35 factories.
Five of those marked for disposal produce meat products and account for around 2,800 jobs. The meat manufacturing sites up for sale, which produce Pork Farms products, are Palethorpes in Market Drayton, which employs 700; Nottingham 524; and Shaftesbury 160. The Trowbridge site, which employs 705 and the Manchester factory, with 731 staff, are also up for disposal. Last week Northern also announced it was axing 150 jobs at its headquarters as part of an ongoing rationalisation programme.
A spokeswoman for the company said the job losses would take into account the repositioning of its business. Northern aims to cut central costs by £12m by 2007/8. This will be through a continued central procurement policy and a simpler category structure. Responsibility will be devolved to category teams with common standards, processes and disciplines.
Around 75% of Northern sales are accounted for by five customers - Marks & Spencer, Asda, Morrisons, Tesco and Sainsbury's. Amid the continuing supermarket price war, Northern has struggled to pass on rising overheads to food retailers. O'Driscoll said: "We had some success but it took longer than we thought." The company said the sale of its Trowbridge plant had nothing to do with the loss of its battle to produce pork pies under the Melton Mowbray badge, after the Melton Mowbray Pork Pie Association won PGI status for the product.
The business will now re-focus on supermarket ready meals, claiming it will stop giving in to the squeeze on prices being applied by supermarkets. It will also focus on Goodfella's pizzas and its Fox's biscuits business. Northern believes the cash generated from the disposal programme will yield £200m and transform its operating profit margins from 4.9% to 6.6%. The £200m will be used to pay off some of its £363m of debt, shore up its pension deficit and allow for future investment.
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