Northern Foods has reported a 21.2% increase in full-year pre-tax profit to £40m on sales up 3% at £888.5m.

The food manufacturer, which makes products including Goodfella's pizza and Fox's biscuits, last year sold off 40% of its business as part of a radical review.

New CEO Stefan Barden said he expected continued opportunities for revenue growth and improved performance.

However, Barden also warned that challenges remained in the biscuits market where Northern Foods was 'experiencing a sustained increase in input costs”.

Continuing profit from operations in its bakery division, which includes its biscuits business, fell 26.4% to £17m on continuing sales down 5.1% to £197.3m.

Biscuits had been streamlined to focus on 'every day', 'seasonal' and 'own label', and value would be created through focusing on product innovation and selected investment, Barden added.