NORTHERN Foods said its recovery was well under way yesterday after half-year underlying profits lifted seven per cent in the face of tough trading conditions.

The company, which has merged 15 former operating units into three divisions and shut two plants, drew encouragement from market share gains for some of its key brands, including Fox's biscuits and Goodfella's pizza.

Underlying profits for the six months to October 1 were £38.4m as the bakery and frozen foods divisions performed well.

However, profits at the chilled business, which includes ready meals and sandwiches, remained "unacceptable".

Pat O'Driscoll, Northern's chief executive, said significant new business wins had been achieved with major retailers, although rising energy remained a concern.

Northern employs 300 people at its Dalepak frozen food factory in Leeming Bar, North Yorkshire.

The plant manufactures a range of meat and meat-free products, as well as the Ross brand of burgers

The Leeds-based company said that it had begun negotiating with its retail customers to recover some of the overhead increases it has experienced.