Northern Foods is bullish about acquisitions over the next year after its first half results received a good reception from analysts.

The company, the UK’s biggest producer of ready meals, posted sales growth of 6.8% and underlying operating profits up 3.1% to £20.1m, ahead of expectations. However, a one-off tax charge and the cost of mothballing the Fenland Foods ready meals plant led to a net first-half loss of £17.1m.

Northern was expanding its product range to deal with the economic downturn, said chief executive Stefan Barden.

“Many of our Marks & Spencer products have been part of its £10 meal deals, while we’ve also worked with Tesco on several of their new tertiary brands,” said Barden. “We’re also doing business with the discounters, particularly Aldi and Lidl.”

Northern has around £270m of debt, £148m of which is borrowed as a loan with a fixed rate until 2012. This means the company is using only about £120m of its £460m credit facility.

“We’re in a strong financial position and we’re ready to capitalise on that,” he said. “Several others in the marketplace are not in the same place as we are and we’re confident there will be opportunities. We’d like to make some acquisitions and are saving our cash for that.”