Northern Foods H1 sales boosted by TV campaign

By Matthew Scuffham

LONDON (Reuters) - Food manufacturer Northern Foods (NFDS.L) reported increased first half sales on Tuesday, with sales of its Fox's biscuits brand boosted by a TV advertising campaign.

And looking ahead, the Leeds-based group, which also makes Goodfellas pizza and supplies ready meals to Marks & Spencer (MKS.L), said it is on track to deliver pretax profit before restructuring charges in line with expectations.

However, its shares, which have fallen 37 percent since the start of the year amid concerns over the declining consumer environment and rising costs, lost a further 2 percent, trading at 59-1/4 pence at 8:40 a.m., valuing the business at about 278 million pounds.

But analysts at Citigroup, who rate the stock a 'sell' with a 65 pence target price, said they did not believe the statement would reassure investors.

"With the current UK consumer environment in mind, we believe an appropriate level of scepticism should be applied," Citigroup said.

The average forecast for underlying full-year pretax profit is 48 million pounds, according to Reuters Estimates.

Northern, which is also a supplier to each of Britain's other major supermarkets, said first-half underlying sales grew by 3.9 percent with total sales up 6.5 percent.

The group said underlying bakery sales rose by 6.7 percent in the first half, reflecting the benefits of its 5 million pound 'Vinnie' TV advertising campaign for Fox's biscuits, which featured a character that was a mix between a panda and a dog and was launched over April and May.