FRESH foods group Geest blamed the unprecedented impact of turbulence in the supermarket sector for a 16 per cent fall in half-year profits.

The group, which employs about 400 people in Selby, North Yorkshire, saw margins come under pressure after chains such as Morrisons and Sainsbury's slashed product prices in response to intense competition in the sector.

The group, based in Peterborough, also suffered during the fall-out that followed Philip Green's takeover bid for Marks & Spencer, when deals with food suppliers were redrawn to save more than £100m a year.

Selling prices to retailers fell two per cent in the period, forcing the group into a restructuring that included the loss of up to 100 management jobs at a cost of £2m this year.

The group supplies retailers with products including ready-made salads, pasta, pizzas and desserts. It employs more than 10,000 staff at factories around the UK.

A deal worth £5m a year was signed with Boots during the period, while Geest also agreed to make a range of products for Heinz that will be stocked in UK convenience stores.

The company yesterday announced the acquisition of food manufacturer Anglia Crown for up to £16m, gaining a foothold in the market for hospital food in the UK - worth an estimated £250m.