Uniq set to close desserts factory

LONDON (Reuters) - Convenience food maker Uniq (UNUNI.L) plans to close its chocolate desserts factory in Paignton, south-west England, which employs about 390 people, as it seeks to turn around its loss-making desserts business.

The firm also said on Monday it had reached an agreement with major customer Marks and Spencer (MKS.L) that would lead to more desserts business with the food and clothing retailer.

Uniq, which in March cancelled its dividend and warned of tough trading conditions, said despite this new deal it needed to reduce capacity in desserts.

As a result the firm, which employs around 6,500 people, said it was starting a consultation process with staff about potentially closing its trifles and chocolate mousse factory in Paignton, England.

It plans to transfer chocolate-dessert production to another site in Minsterley, England, and said the reorganisation was likely to take about 18 months and cost around 20 million pounds.

The result will cut the group's fixed cost base by about 11 million pounds a year, with savings from the start of 2009.

Sales were up 0.8 percent at constant currencies in the first three months of this year, Uniq said.

The firm said it was working to offset higher raw material costs by increasing prices and winning new business.

Uniq shares closed at 109.5 pence on Friday, valuing the business at about 121 million pounds.

(Reporting by Mark Potter; Editing by Quentin Webb)