Northern Foods today said it had fallen into the red as it counted the cost of its business shake-up and factory closures.

Northern, which makes Fox's biscuits, Dalepak frozen foods and Goodfella's pizzas, said it made losses of £35.9 million in the 26 weeks to October 2 against profits of £25.8 million last time.

The group attributed the deficit to a one-off operating charge of £34.8 million for its restructuring and the planned shutdown of two pastry plants at Evesham in Worcestershire and Carlisle, Cumbria, with the previously announced loss of 1,060 jobs.

It added that it had made a net loss of £32.1 million after goodwill on the sale of businesses such as its Emile Tissot frozen foodservice and Eden Vale Minsterley fresh chilled dairy products operations.

Northern, which is facing pressure from rivals amid a price war in the supermarket sector, said its markets remained extremely competitive.

It added that it faced "significant additional uncertainty" over the trading of troubled customer Marks & Spencer, which it said was making its performance in the key Christmas period particularly difficult to predict.

However, it said underlying sales in the period were up 3.4% and pre-tax profits before one-off items and losses on business disposals had risen 1.5% to £33 million.

Chairman Peter Blackburn said: "We are confident we have the right structure and plans in place to enable Northern Foods to realise the full potential of its scale and product expertise in growing segments of the UK food market."