QUORN-MAKER Premier Foods yesterday announced a £35m investment in one of its factories in the region.

The group plans to build a fermentation unit at its plant in Billingham, Teesside, to support the meat-free side of the business.

Premier, which also owns the Branston, Campbell's and Mr Kipling brands, will make the investment over the next two years.

The announcement was part of a trading update, in which Premier said it was on track to hit profits targets, but warned of higher interest charges and rising wheat costs.

The update came only a week after the company announced plans to close six factories with the loss of nearly 600 jobs as part of a plan to concentrate production at five sites.

Premier bought North Yorkshire-based Quorn-maker Marlow Foods in June 2005 for £172m. Five months later, it acquired Cauldron Foods for £27m.

Its meat-free business has factories in Belasis, Billingham, and Stokesley, in North Yorkshire. A third factory has recently opened in Methwold, in Norfolk.

Since its UK launch ten years ago, Quorn has become the UK's largest meat alternative brand.

It initially targeted vegetarians, but has recently been boosted by the trend towards healthier eating and lower meat consumption.

Quorn is made from mycoprotein, a member of the fungi family, and can be used as a substitute for meat because it is high in protein, low in fat and high in fibre.

The raw material is grown by a fermentation in Billingham, before being sent to Stokesley for processing.

Yesterday, Premier said: "We have also commenced the construction of an additional fermentation unit at our Belasis factory at a cost of £35m over the next two years to support the further significant growth that we anticipate from Quorn."

Premier became the UK's largest food supplier - ahead of Mars, Nestle and Northern Foods - following its acquisitions of Mr Kipling firm RHM for £1.2bn and the UK part of Campbell's Soup for £460m.

In a statement, the company said revenues for the first half of the year will be higher following the acquisitions, although sales are expected to fall after Premier cancelled a number of low-margin own-label contracts.