Chilled food group Uniq has edged closer to a recovery after its UK and French operations returned to profit.

The sandwiches and ready meals supplier reported a UK profit of £5.9 million last year, against a £2.8 million loss in 2006 amid an overhaul launched two years ago.

Gerrards Cross-based Uniq said it still had work to do in turning the business around and would face a tougher year ahead.
It added that it was renegotiating the terms of its contract with major client Marks & Spencer - which accounts for 27% of group sales - in a move which could have a significant impact on its UK arm.

Uniq has been appointed by M&S as supplier for its three core 'Food to Go' offerings - fish, deli and premium desserts. It hopes that contract discussions will lead to a greater share of M&S business.

Efforts to stabilise its desserts business have failed. It tried to return the division to profit last year but said the performance remained 'unacceptable'. Uniq has seen falling sales and took a £31.1 million hit in its troubled desserts factory in Shropshire, despite spending £36 million on upgrading the site last year.

Uniq's recovery plan has so far seen the firm sell off its French spreads business and its Belgian salads operation. It has also launched a group-wide restructure and cost cutting regime.

Geoff Eaton, chief executive of Uniq, said: 'In the UK, the tough economic environment and the lag in inflation recovery has increased the challenge of maintaining profit at last year's level.'

Shares in Uniq fell 12% to 118.5p.