Factory fire could burn hole in Northern Foods profits

By Catherine Boal

- Last updated on GMT

Related tags: Northern foods, Bread, Baking, Cake

Fire has devastated a UK bakery plant owned by struggling food
processors, Northern Foods, in an incident likely to harm their
already faltering profits.

Officials will enter the Fletcher's Bakers site in the next few days to assess the extent of the damage and what impact this is likely to have on production at the factory, which produced speciality bakery goods such as muffins, doughnuts and buns.

Costs could be high for the company who released disappointing preliminary full year results at the end of May - showing that profit before tax had dropped from £62.4m (€90.6m) to £45.1m (€65.5m).

Up to £4m (€5.8)worth of damage to property and loss of business at the Sheffield plant, which employed 650 workers, will be covered by the company's insurance. However, as the insurance company is wholly owned by Northern Foods, this could result in a sizeable dent in company profits.

The Fletchers site consists of two buildings, only one of which was damaged by the fire.

Five of the 14 production units that were operable at the bakery are still being maintained in the unscathed building, while other operations have been transferred to alternative Northern Foods factories.

A spokeswoman for the company told bakeryandsnacks.com: "We are very optimistic about getting the factory up and running soon."

Northern Foods, who supply Tesco and other big name retailers with snack foods, frozen products and baked goods, has issued three profit warnings since the start of the year and sold £200m (€290.4m) worth of assets recently in a bid to offset dropping sales.

The bakery division reported a 12 per cent loss of sales in biscuits, reflecting a general trend towards healthier fare.

Northern Foods currently has 20,500 employees in its factories across the UK and Ireland.

In its bakery portfolio, the company has brands such as Foxs' biscuits and Park Cakes among others. It also supplies flour to the industry with ownership of Smiths flour milling business

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