Northern Foods, which has a factory in the region, today reported a pick-up in sales but warned trading remained tough with outbreaks of bird flu pushing up the cost of chicken.

The firm, which makes Goodfella's pizzas and Fox's biscuits, said it had also been hit by the higher price of energy and more expensive beef. In an update ahead of results for the six months to October 1, Northern said underlying sales on continuing operations were around 3.4 per cent higher than last time.

This compared with a 3.2 per cent hike for the 13 weeks to July 2, although Northern added that surging input costs continued to hamper progress.

"We've seen the rising cost of utilities starting to impact the first half and that will continue clearly in the second half," said finance director Jez Maiden.

"We've seen some impact from the uncertainties over avian flu, and that tended to push up the price of chicken we buy in the UK. Also you're seeing the protein producers suffering the rising price of energy themselves."

Avian flu has killed 65 people and millions of birds in Asia since 2003. Romania and Turkey began culling hundreds of birds over the weekend, raising fears the disease could be spreading across Europe.

Northern employs 300 people at its Dalepak frozen food factory in Leeming Bar, North Yorkshire, which manufactures a range of meat and meat-free products and the Ross brand of burgers.

In 2003 the Leeds-based company began a shake-up to correct a string of disappointing financial results.

It merged 15 former operating companies into three divisions, shut two plants and axed 30 management posts and 1,000 other jobs as part of the overhaul launched by chief executive Pat O'Driscoll.

She said today: "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." Analysts expect pre-tax profits to come in at around £75.6m this financial year.