NORTHERN Foods was counting the cost of recent factory closures yesterday as it announced losses of nearly £36m.

The company, which employs 300 staff at a frozen foods factory in Leeming Bar, North Yorkshire, said it made losses of £35.9m in the 26 weeks to October 2, compared with profits of £25.8m last time.

Northern, which makes Fox's biscuits, Dalepak frozen foods and Goodfella's pizzas, blamed the deficit on a one-off operating charge.

The charge of £34.8m was for the group's restructuring and the planned closure of two pastry plants at Evesham, in Worcestershire, and in Carlisle, Cumbria, with the loss of 1,060 jobs.

At the time of the job cuts announcement, in September, Northern assured workers at its North Yorkshire factory that their jobs were safe.

In the results announced yesterday, it said it had made a net loss of £32.1m after goodwill on the sale of businesses such as its Emile Tissot frozen food service and Eden Vale Minsterley fresh chilled dairy products operations.

Northern, which is facing pressure from rivals in a supermarket price war, said its markets remained extremely competitive.

It said it faced significant additional uncertainty over the trading of troubled customer Marks & Spencer, which it said was making its performance in the Christmas period particularly difficult to predict.

However, it said underlying sales in the period were up 3.4 per cent and pre-tax profits before one-off items and losses on business disposals had risen 1.5 per cent to £33m.

Chairman Peter Blackburn said: "We are confident we have the right structure and plans in place to enable Northern Foods to realise the full potential of its scale and product expertise in growing segments of the UK food market."

Northern has reshaped itself under new chief executive Pat O'Driscoll to replace 16 operating companies with four divisions - two focused on chilled products and one each in ambient temperature and frozen food.

The group said in September that it expected the proposed factory closures, which follows the loss of 30 senior management jobs this year, to generate annual savings of £10m.

Northern said it would transfer production to its other UK plants, which have received more investment in recent years and offered more room for expansion.