DALEPAK provided one of the few high points in a difficult and disappointing year for Northern Foods that saw the company's annual profits slump 12 per cent to £86m.

The group, which includes Fox's biscuits and Goodfella's pizzas, suffered from high raw material prices, the loss of a major contract with Sainsbury's and disruption caused by last summer's heatwave.

But the heat helped Dalepak, based in Leeming Bar, North Yorkshire, to a bumper barbecue period with demand high for its products.

Northern said it appeared to be on a sounder footing after a drive in recent months to focus on its core strengths and tackle costs. The appointment of a new chief executive has also boosted hopes.

Peter Blackburn, chairman, said: "Although this has been a difficult and disappointing year, and we recognise that much remains to be done, I am confident that we have begun to take the right actions to equip the business to compete in this most demanding climate."

In the 53 weeks to April 3, Northern said profits fell ten per cent to £101.3m - mainly because of pressure in convenience foods, where profits fell 23 per cent to £56.1m.

On a brighter note, the grocery division improved operating profits by 12.7 per cent to £45.2m after the biscuit business recovered from the difficult conditions of the previous year and Green Isle continued to increase its share of the frozen pizza market.

During the year, Northern boosted its presence in the sandwich, prepared salad meals and pasta snacks markets by acquiring Solway Foods for £26.7m. It also sold Fox's Confectionery and its Batchelors and Beck Smith operations in Ireland.

This year's figure also included reorganisation costs of £8.2m following the merger of the company's Fox's and Elkes biscuit businesses and the set-up of central systems for finance, IT and procurement.