THE IRISH operations of Northern Foods, which encompasses the Green Isle brand, continued to be one of the company’s worst performing divisions in the third quarter of the financial year, according to a trading update by the London-listed plc yesterday.
Third-quarter figures showed that while London-listed Northern Foods posted an overall increase of 2.3 per cent in sales, the frozen food division, which includes the Goodfella’s pizza brand, saw sales drop by 17. 2 per cent. This follows a 17.4 per cent drop in quarter two.
Green Isle Foods, which was bought by Northern Foods in 2005, accounts for most of the company’s frozen food division, and employs about 550 people in four sites across Ireland.
Both Northern Foods and Greencore have indicated that job losses may be necessary if the proposed merger between the two companies goes ahead. However, yesterday Northern Foods reiterated its commitment to the Goodfella’s brand.
Northern’s frozen food division has underperformed for more than a year, prompting it to invest about £2 million last year in rebranding Goodfella’s pizza brand, which has been facing stiff competition from rivals such as German brand Dr Oetker.
While noting that the rate of decline in the company’s frozen food division has slowed, Northern Foods chief executive Stefan Barden said the performance of the division is “not where I want it to be”.
Goodfella’s pizzas – which have a 20.9 per cent share of the UK market – are produced at the Green Isle base in Naas and Longford.
Meanwhile, Northern Foods also confirmed yesterday it has had a number of meetings with Ranjit Boparan, the British chilled food magnate who is considering mounting a counter bid for the company, as part of the due diligence process.
Northern’s’ shares have been trading at a premium to those of Greencore, implying that the market is pricing in that a counter bid will be made for Northern before the end of next week – the deadline for Mr Boparan’s offer.
Northern reiterated its contention that the proposed deal with Greencore represents “a compelling opportunity for both companies”, and noted that there was officially only one bid on the table. However, Mr Barden said the company would consider a deal from Mr Boparan if such a deal was made, and that price would be a key issue.
Greencore and Northern Foods shareholders are due to vote on the proposed merger, which will result in the formation of a new company, Essenta, on January 31st. Mr Boparan has until January 21st to submit a bid.
Northern Foods closed 0.8 per cent lower yesterday at 61.5p, while Greencore shed 1.2 per cent to close at €1.32.
