GROCERIES and ready meals maker Northern Foods has warned that profits are continuing to be dogged by problems with its Fox's biscuit business.

The biscuit arm was responsible for dragging down annual results below expectations, a scenario which is expected to continue in the new financial year.

Reporting figures for the year to March 31, the Hull-based company said trading was below its original plans, with profits rising by only £0.6m to £115.6m.

Northern Foods is the parent company of Dalepak Foods which has a factory at Leeming Bar, North Yorkshire, producing grillsteaks, burgers and pastry products for most of the big supermarket chains.

The Fox's biscuits division was hit by competition from the confectionery sector, along with manufacturer-driven promotions on biscuits and higher cocoa prices.

Restructuring of Northern Foods' pizza and quiche operations for supermarket chain Tesco helped lift sales along with increased manufacturing at its Pork Farms.

Operating profit for groceries fell by £4.9m to £45.6m in the period, due largely to the difficulties with biscuits.