Northern Foods has reported a pick-up in sales but warned trading remained tough as it faced up to higher energy costs.
Northern, which makes Dalepak frozen foods, Goodfellas pizzas and Fox's biscuits, said in an update ahead of results for the six months to October 1 that underlying sales on continuing operations were around 3.4 per cent higher than last time.
This compared with a 3.2 per cent rise for the 13 weeks to July 2, although Northern added that surging input costs continued to hamper progress.
The Leeds-based firm, which has been hit by the higher price of energy and more expensive meat, added that profit margins should be broadly the same as last year.
The company began a shake-up in late 2003 to correct a string of disappointing financial results.
It has merged 15 former operating companies into three divisions and shut two plants, including one in Carlisle, as part of the overhaul launched by chief executive Pat O'Driscoll.
Ms O'Driscoll said: "As has been well-documented, the trading environment remains tough and we will need to recover further input cost inflation in the second half, particularly in utilities."
However, she added: "I am encouraged by the good progress we are making to restructure and refocus the business towards our goals."
Marks & Spencer accounts for about 30 per cent of the firm's business, with other major customers including Tesco, Asda, Sainsbury's and Morrisons.
The group said its chilled foods division was starting to show progress, although it would take time to improve profitability to an acceptable level.
Trading at its frozen foods business and cakes division remained "robust".
Northern Foods employs around 22,000 staff at sites across the country which includes the Palethorpes factory in Market Drayton.