A SURGE in demand for value lines helped Northern Foods beat market expectations for full year sales yesterday.<br /><br />But the group’s pre-tax profit still fell 5.4 per cent to £47.5m from £50.1m the year before due to restructuring costs. And it warned on future trading due to the rising price of ingredients and pressure from competitors.<br /><br />Value lines, which now account for a fifth of all Northern Food sales, helped lift group sales by 4.6 per cent to £975.2m, well ahead of analyst expectations.<br /><br />But chief executive Stegan Barden said that all retailers – from Marks and Spencer to Aldi – were demanding lower wholesale prices, which would affect Northern Foods’ margins. “We’re seeing all retailers toughening up on pricing,” he said.<br /><br />He added that Northern Foods would continue to focus on value lines to meet the surge in demands from retailers and consumers. It recently opened a factory to produce pizzas which retail at £1 for Asda and has also increased capacity, for example.<br /><br />Citigroup analyst Eamonn Ferry said: “We view this update as positive in the context of unprecedented economic headwinds. Although the outlook is cautious, Northern Foods shares are an attractive proposition.”<br /><br />The firm said 349 jobs were under threat as it launched a consultation over the closure of its Hull site, which has lost a contract to make ready meals for supermarket Wm Morrison.<br /><br /><strong>FAST FACTS </strong>NORTHERN FOODS<br />&9679; Northern Foods supplies ready meals to Marks&Spencer and, recently, value chain Aldi.<br /><br />&9679; Northern Foods’ £7m marketing campaign for Fox’s Biscuits using Vinnie the panda led to a £4.3m sales increase.