Northern Foods has shelved plans to develop a new factory for its Fox's biscuit production for at least six to nine months.
Workers in the company's Batley and Uttoxeter plants had been campaigning for the company to site the new facility in their respective areas. Northern had acquired planning permission for both sites.
But the potential development costs had increased significantly, chief executive Stefan Barden said this week. "The new facility will be fully automated, and the automation equipment is almost all from the eurozone," he said. "Currency effects had increased the cost by 50%, while the freehold land we hold at both sites has gone down in value."
However, Barden said the projected benefits of the scheme had also increased significantly .
"The costs at the early stage might have increased, but the cost savings down the line are similarly much higher than first thought," he said. " The proposal is just as good as it ever was, but the priorities have shifted. No-one knows what capital markets are going to be like over the summer, and as such it's more prudent to wait."
Northern announced its decision as it updated the market on its fourth-quarter sales figures ahead of its annual results. Underlying sales in the fourth quarter were up 8.8% year-on-year, driven by strong volume growth in the chilled and bakery divisions.
For the full year, like-for-like sales (excluding the effects of currency and the mothballing of Fenland) were up 4.7%, though volumes were relatively flat. Barden said Northern predicted volume growth of 1%
Workers in the company's Batley and Uttoxeter plants had been campaigning for the company to site the new facility in their respective areas. Northern had acquired planning permission for both sites.
But the potential development costs had increased significantly, chief executive Stefan Barden said this week. "The new facility will be fully automated, and the automation equipment is almost all from the eurozone," he said. "Currency effects had increased the cost by 50%, while the freehold land we hold at both sites has gone down in value."
However, Barden said the projected benefits of the scheme had also increased significantly .
"The costs at the early stage might have increased, but the cost savings down the line are similarly much higher than first thought," he said. " The proposal is just as good as it ever was, but the priorities have shifted. No-one knows what capital markets are going to be like over the summer, and as such it's more prudent to wait."
Northern announced its decision as it updated the market on its fourth-quarter sales figures ahead of its annual results. Underlying sales in the fourth quarter were up 8.8% year-on-year, driven by strong volume growth in the chilled and bakery divisions.
For the full year, like-for-like sales (excluding the effects of currency and the mothballing of Fenland) were up 4.7%, though volumes were relatively flat. Barden said Northern predicted volume growth of 1%
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