THE parent company of Baxenden-based Hollands Pies today said it had fallen into the red as it counted the cost of its business shake-up and factory closures.

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

Hollands Pies, which has been part of Northern Foods for the past 25 years, employs more than 500 people at its Baxenden base.

It is the biggest manufacturer of pies, puddings and pasties in the North West.

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

The company also shed more than 20 senior management posts earlier this year, including former Hollands managing director Graham March.

It added that it had made a net loss of £32.1million after goodwill on the sale of businesses such as its Emile Tissot frozen food service 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 per cent and pre-tax profits before one-off items and losses on business disposals had risen 1.5 per cent to £33million.