NORTHERN Foods was yesterday counting the cost of a restructuring programme that wiped out annual profits.

The group, which employs 300 workers in a frozen food plant near Northallerton, North Yorkshire, revealed profits for the year ending April 2 collapsed to only £4.3m, from £75.4m a year earlier.

Northern, which is one of the biggest suppliers of food to Marks & Spencer, incurred more than £75m in one-off costs, including £45.3m for factory closures and group reorganisation.

Pat O'Driscoll, chief executive, said: "By taking fast, decisive action, we are addressing the challenges of a difficult operating environment and are shaping up to compete as the market becomes even tougher.

"We eliminated a great deal of duplication, removed a layer of management and shortened and clarified reporting lines."

An efficiency drive saw one factory halve waste levels in six months. The scheme is to be extended to all factories.

It followed a restructuring started in autumn 2003, to address a period of disappointing financial results.