Strong sales of Goodfellas Pizzas made by the Green Isle offshoot of Northern Foods have been achieved in Irish and British markets since the opening in May of its new £25 million (€32 million) plant at Naas, Co Kildare.

Mr Jo Stewart, chief executive of Northern Foods, said sales of the new pizza product had reached a rate of £10 million per year, on track to reach the target of £30 million annual sales in two years.

The Naas plant has moved quickly to a break-even position and is expected to produce annual profits of £5 million when the sales target is achieved.

Although the new product is being sold under the Goodfellas brand in Ireland, it is also being marketed directly through Tesco where sales growth has been particularly strong.

Following the "thin and crispy" launch, Green Isle is now spending around £5 million on modifications at the existing Naas plant so that deep-pan pizzas can be made in nine-inch as well as 12-inch sizes.

Further growth in Green Isle sales and profits are expected to have a significant influence on future results of Northern Foods which is facing difficult market conditions in the UK affected by intensifying competition among major supermarket chains.

Margins came under pressure in first half trading at Northern Foods where profits edged forward by 2.2 per cent to £41.1 million on sales up 5 per cent at £641 million after including acquisitions.

But sales to the group's largest customers, including Tesco, Sainsbury's and Marks & Spencer, increased by 7 per cent and the quarterly trend shows marked improvement. Underlying sales rose 0.5 per cent in the first quarter followed by a 3.5 per cent sales gain in the second quarter.

Chairman Lord Haskins said the sales momentum of the second quarter had continued into the autumn with retail sales up 5 per cent in the first five weeks of the second half.

"The Christmas sales programme has started satisfactorily and we are deriving steadily increasing benefits from our capital investments," he said.

In Ireland, Batchelors maintained "sales progress" in the first half in both its canning and fruit juice activities but profitability was affected by "substantial currency-related increases" in raw material and packaging costs.

Price increases have already been put through to recover these cost increases. The interim dividend is increased by 5.8 per cent to 2.75p per share.