Northern Foods has posted a profit warning as a result of ongoing promotional activity by retailers and continued investment in its chilled food business.

“Given the ongoing promotional activity in biscuits and continuing investment in the chilled turnaround programme, second half continuing operating margin will be below the prior year,” said the company in its third quarter update.

“Accordingly,” it added, “the group’s profit before tax for the current year is expected to fall below the prior year.”

The company said the process of securing higher selling prices was taking longer than expected.

However, it said sales in its frozen division showed strong year-on-year growth, partly driven by the successful launch of its Goodfella’s Solos pizza range.

Northern Foods said sales for continuing operations in the 12 weeks to December 31 had risen by 3%. Sales in the run-up to Christmas had met expectations, it added.