The group, which posted a 7.7% drop in pre-tax profit to £9.6m on sales down 3% to £453m in the 26 weeks to October 2, said the Italian ready meals site – which was mothballed in 2008 after the firm failed to agree terms with Marks & Spencer – told FoodManufacture.co.uk the factory had been used as a “pilot site”.
A spokesman added: “We said in the past that we might re-open it in future, but it wasn’t a commitment.
"We’ve been using it to trial some new technology and now we’ve come to the end of that process and we’re moving the equipment into other sites, so over the coming months we will wind down the site and at the end of this process, we may put it up for sale.
“As a result we have impaired the assets and taken a restructuring provision of £3.7m in the first half. We are now focusing on our manufacturing capacity being based upon two large scale, efficient and highly automated sites, alongside our speciality Grimsby soup and sauces site.”
Strong performance in chilled, losses in frozen
Headline results at the group were hit by lacklustre results in the frozen division, which made a £4.6m operating loss in the first half as the ‘Pizza Fairy’ campaign failed to deliver a significant uplift in sales.
However, chilled operating profits were up from £7.2m to £11.8m said chief executive Stefan Barden (pictured). “Demand for fresh, healthy and convenient food remains strong. The outlook for the ready meals, sandwiches and salads markets is positive, with long-term growth prospects.
“In frozen, we are taking decisive actions to support performance improvement. Whilst the sales decline slowed at the end of the first half, the impact from our investment in Goodfella's is not yet delivering profitable sales growth."
Bakery: New 'plug and play' portable technology
Bakery profits were up from £8.2m to £10.3m, however. “Our significant £26.5m investment in new automated technology within Fox's Biscuits is proceeding well and nearing completion. New 'plug and play' portable technology is being implemented, with testing due to complete by the end of our current financial year.
“At its conclusion this project will deliver improved EBITDA [earnings before interest, tax, depreciation and amortisation] during the 2011/12 financial year.
“We believe that further opportunities to increase automation within this business remain available to us.”
City reaction
Investec Securities analyst Nicola Mallard said the £4.6m loss in the frozen division was “worse than we were expecting. To meet full year profit expectations frozen must return to a reasonable level of profit." However, the performance from chilled was ahead of expectations.
Panmure Gordon analyst Damian McNeela added: “Frozen continues to be the main area of concern. Given the highly competitive nature of the category and Dr. Oekter's current dominance, our concern is that further investment may be required to drive further market share gains.”