2004 press releases

Christmas trading was good and we achieved high levels of customer service and factory efficiency.  As a result, underlying sales performance in the three months to 31 December 2003 was stronger than in the preceding quarter, despite the full impact of losing a major savoury products contract and the continuing effects of unseasonably warm weather in October and November.

Key sales data

	% chnage vs 2002
Three months to:	30 June 2003	30 Sept 2003	31 Dec 2003
Totals sales	+5.8%	+7.2%	+7.2%
Underlying retail sales	+5.5%	+1.5%	+3.5%
Sales to five largest customers	+7.0%	+8.5%	+8.0%
Underlying sales to five largest customers	+6.0%	+1.5%	+3.5%

Northern’s five largest customers are Marks & Spencer, Tesco, Asda, Sainsbury’s and Safeway. Total sales reflect the acquisition of Solway Foods on 30 June 2003.

Profitability was higher in the third quarter than in the previous three months, although total profits for the period were lower than in the comparable quarter last year. Our robust sales performance and overhead cost savings produced results which improved progressively month by month.

We have continued to adjust our business portfolio with the aim of aligning the group more closely with some of the fastest growing sectors of the food market. Fox’s Confectionery was sold in September and we announced the disposal of our Batchelor’s and Beck Smith businesses in Ireland in December, realising a total of £52 million. So far this year we have returned £22 million to shareholders through our share buyback programme, equivalent to over 40% of these disposal proceeds. This will help to mitigate the dilutive effect of the disposals on earnings per share.

 Excluding such dilution, we have advanced towards our aim of stabilising second half profits at around last year’s level. However, further progress needs to be made in the final quarter to recover continuing raw material inflation, in a very demanding trading environment, and to achieve additional reductions in overhead costs.