Premier Foods has posted a rise in quarterly sales and said its restructuring programme was on track to help it meet its full-year expectations.
Britain’s biggest food producer posted overall sales from ongoing businesses, excluding milling, up 2% to £364.7m in its third quarter to 30 September, helped by its focus on a slimmed-down portfolio of eight core ‘power brands’ which include Hovis, Bisto, Ambrosia, Batchelors and Loyd Grossman sauces. Sales of power brand sales gained 2% in the first nine months of the year, while grocery power brands sales climbed 4.1%.
However, the group also revealed today that it had lost a major supermarket own label bread contract due for renewal in mid-2013 worth about £75m in annual sales and was examining "a range of options" for its bread business, which accounts for nearly 40% of revenues. It
announced earlier this month that it was
separating its bread business from its grocery arm into a new division. Bread
has proved a tricky business for Premier as high wheat prices and costly
logistics squeeze margins.
Meanwhile, Premier has been selling non-core businesses to bring down its £1.3bn debt pile and said today that it expected to cut costs by a further £20m in 2013 after saving some £40m so far this year. The company said it expected to raise £275m from asset disposals by the end of the year, which would cut its debts by 22%.
Earlier this year, it sold its flour brand Elephant Atta and Sarson's vinegar and said it would sell its jam and spreads business to US food maker Hain Celestial Group for £200m. Premier secured breathing space by securing a £1.4bn refinancing deal in March, which requires it to make £330m of disposals by June 2014.
Commenting on results, Michael Clarke, Chief Executive Officer said: "I'm delighted that we've grown sales of our grocery power brands for a third successive quarter despite the challenging consumer environment. This underlines the substantial progress we have made this year in stabilising the business and delivering against our strategic priorities.
"We intend to build on this progress as we continue to drive momentum behind our grocery power brands particularly through capturing opportunities in the growing convenient meals and snacking segments. We are also continuing our work to unlock the value in our Bread business, through taking the necessary decisions to improve sustainable profitability. We have a solid programme in place for the important Christmas trading period and our full year expectations are unchanged."
NamNews - Tuesday 23rd October 2012