UPDATE 1-Northern Foods ups prices, says full-year on track

(Adds comment from CEO and analyst, background, shares)

By Raissa Kasolowsky

LONDON Jan 15 (Reuters) - Britain's Northern Foods Plc NFDS.L, maker of Goodfella's pizzas and Fox's biscuits, said on Tuesday it had been able to raise prices to offset the higher cost of ingredients and should meet full-year profit forecasts.

Chief Executive Stefan Barden said that although market conditions were tough, Northern Foods had not felt any effect from tighter consumer spending and could even benefit from a potential downturn.

"Our analysis is that when spending gets tight, people trade down from the restaurant to premium food in the retailer, so we expect to be a slight beneficiary from that," Barden said.

The Leeds-based firm, which also makes sandwiches and ready meals for Marks and Spencer (MKS.L), said underlying revenue rose by 3.5 percent in the 13 weeks to Dec. 29, reflecting a 3.5 percent increase in prices and unchanged volumes.

As a result, Northern Foods said it expected to meet a market forecast of 47.5 million pounds ($93 million) for full-year pretax profit.

Panmure Gordon analysts, who have a "buy" rating on Northern Foods stock with a target price of 130 pence, said: "The trading update confirms a good third quarter and Christmas".

"This continues the progress delivered in the first half and suggests the recovery strategy being implemented by Stefan Barden is working", the brokerage added.

Following the sale of unprofitable businesses a year ago, Northern Foods now focuses on ready meals, sandwiches, salads, pizza, biscuits and Christmas puddings.

At 0930 GMT, shares in Northern Foods, which last week reached a 16-month low at 86 pence, were up 2.7 percent at 86 pence, valuing the company at 442 million pounds.

Northern Foods said its chilled division enjoyed the best third quarter, with underlying revenue up 5.2 percent while bakery rose 4.2 percent. Its frozen food division saw sales fall 0.9 percent.

Barden told reporters the company was covered against rising ingredient costs into its next financial year, "certainly up to the next harvest".

"There is steady inflationary cost pressure building up there and if commodities do increase then we'll have to check pricing," he said. (Editing by Erica Billingham)