Northern Foods reported a 5.8 per cent increase in first-half profits yesterday, and its chief executive hailed the success of her turnaround strategy despite harsh trading conditions.

Profit before tax and exceptional items rose to £25.7 million (€38.1 million) in the six months to the end of September. The frozen foods division delivered a 3.8 percent increase in underlying sales, while the bakery division increased sales by 6.9 percent, but the chilled division's sales of pizzas, sandwiches and ready-meals were flat.

"Profitability in the chilled division is not at an acceptable level," said chief executive Pat O'Driscoll.

After joining the company from oil giant Shell last April, she quickly axed two factories, 30 management posts and 1,000 other jobs to help turn around the ailing firm.

But Ms O'Driscoll expressed hope for the chilled division. "It's a business with fantastic consumer dynamics around people wanting health, convenience and indulgence. We can do that," she said.

Northern Foods said it had gained market share with Goodfella's pizzas, which the company manufactures in Ireland, Fox's biscuits and Pork Farms savoury pastries.

The interim dividend rose to 3.4 pence per share.