Food factory faces a fight

Chilled food group Uniq today celebrated a return to profit - but revealed that its Shropshire desserts factory was still struggling to make money.

The group, which is one of the biggest suppliers of ready meals and desserts to Marks & Spencer and Tesco, announced a pre-tax profit of £1.9 million for last year, compared to a £21.9 million loss the previous year.

But managers said that the company's desserts factory at Minsterley was still struggling to make a profit, despite a £36 million upgrade designed to improve facilities and boost efficiency.

The Shropshire plant managed to break even during the busy pre-Christmas period, but the company revealed in its annual report:

"Whilst we have delivered the efficiency improvements at Minsterley in line with our plan, we remain short of the volume necessary to return this large site to profit."

Chief executive Geoff Eaton added: "The success of our lean manufacturing initiatives at Minsterley has transformed the site's efficiency, and we achieved break-even in the final quarter, with the help of Christmas."

There were other positive notes too in today's report. The company said its coffers had been boosted last year by the sale of a French spreads company and Belgian salad business, which raised a total of £288 million.

And Mr Eaton also revealed Uniq had been chosen as a "strategic partner" to work with Marks & Spencer on the production of new "food to go" ranges, as well as fish, delicatessen, and dessert products.

Despite soaring food price inflation and doubts over consumer spending, Uniq's sales rose by 2.9 per cent to more than £736 million last year. But the company said it was expecting 2008 to be tougher, and said it continued to "review all options" for the desserts arm in its determination to return the division to profit.

"We are a business in recovery and we are making progress on all fronts," Mr Eaton added. Uniq has axed its final dividend to shareholders, which saves the company £5 million.

By Carl Jones