Northern - which owns the Fox's brand and also makes own-label biscuits - said sales of biscuits in the October to December quarter were down 6% on the same period in 2001.

"Normally we would expect to be able to grow our biscuit sales - albeit in a pretty flat market - but we have come under some pressure," said chief executive Jo Stewart.

"The market isn't down, so we were losing share to our competitors because they were being competitive on pricing.

"We see no immediate signs of that sort of competitive activity diminishing at least in the short term," he added.

As well as biscuits, Northern also supplies ready meals and desserts for supermarkets and also owns the Goodfella's pizza brand.

Total sales for the quarter fell by 2.9%, although this was due to Northern having sold its Ski and Munch Bunch brands in April.

Underlying sales grew 2.5%, but this was slower than the 3.5% rate seen in the six months to the end of September.

In afternoon trade, Northern's share price was down 31 pence, nearly 20%, at 127p.