Troubled food manufacturer Northern Foods has reported a 38% fall in half-year pre-tax profit to 30 September of £16m and has warned that trading conditions will remain tough in the second-half of the year.

Sales for the period fell from £651.9m to £645.1m and its bakery division was hit by a highly competitive market, hot weather and a fire at its speciality breads unit Fletchers Bakeries.

There was also little update on the group's disposal programme announced in May this year. The remaining disposals were “progressing in line”, it said.

Of the businesses it is not selling, underlying sales rose 3.6%, with its pizza brand Goodfella's breaking through the £100m annual sales mark.

“Our improvement plans are progressing to plan and our strong focus on cash generation will deliver significant incremental value. There is much still to do but I am encouraged by our initial progress,” said Pat O'Driscoll, chief executive of Northern Foods.

“In the second half of the year we expect to see a continuation of the challenging trading conditions that have impacted parts of the business, particularly in biscuits and the disposal businesses,” she added.