Partly Cloudy

Partly Cloudy

max temp: 20°C

min temp: 17°C

ESTD 1874 Search

UK: Poor harvest eats into Premier Foods profit

15:05 21 February 2013

Premier Foods is on the up

Premier Foods is on the up

Archant

HOVIS and Mr Kipling group Premier Foods served up an 11% rise in annual earnings as swingeing cost cuts helped offset a near-halving in profits across its troubled bread division.

shares

The surplus at the Hovis business slumped 48% to £26.9million after the worst wheat harvest for 35 years in 2012 compounded already tough trading.

But efforts to slash costs by £48m helped increase underlying trading profits to £123.4m in 2012 and the group said it hopes to make “further progress” this year in the face of challenging markets.

In October last year, Premier said it had conditionally agreed the £92.7m sale of its sweet pickle and sauces arm at Bury St Edmunds, which employs 367 staff, to Mizkan, a leading vinegar maker

The following month, it announced plans to axe its distribution plant at Mendlesham, near Stowmarket, where 45 were employed, as part of major cutbacks.

New boss Gavin Darby said he would continue the work laid down by his predecessor to get the business back on track.

The former Cable & Wireless Worldwide chief executive took on the top job earlier this month following the shock departure of Michael Clarke.

He said Premier’s management “did a great job in 2012 to lay the foundations for future growth”.

“It’s important now to maintain continuity and focus on executing our existing strategies,” he added.

Mr Darby joins after a tumultuous year for Premier following a pivotal £1.4 billion refinancing deal, a raft of asset sales and a shake-up of its bread business.

St Albans-based Premier has been struggling to reduce a £1.3billion debt mountain following a spending spree which included Mr Kipling owner RHM.

Under Mr Clarke, net debt reduced to £951m and Premier has been undergoing a turnaround to focus on eight “power brands”, including Ambrosia and Bisto.

He offloaded Sarson’s vinegar and Haywards pickles to Japanese firm Mizkan last year while the group has also announced it will close two bakeries and a flour mill with the loss of more than 900 jobs, having just lost a major £75m bread contract with a supermarket.

Mr Clarke’s exit to pursue other business opportunities came as a shock to the City last month, with fears his departure would throw the restructure off course.

But Mark Moran, chief financial officer at Premier, said: “While it’s clear that markets will remain challenging in 2013, we believe we have the right strategies in place, including the delivery of further overhead cost savings, to make further progress this year.”

Another £20m in savings are due in 2013, while Premier said it was also looking for more opportunities to cut costs.

But the group has moved to downplay speculation that it was planning to offload Hovis, with bosses saying further major asset sales were unlikely.

Figures showed sales of its so-called power brands rose 2.1% in 2012, although grocery profits - down 5.5% - were hit as it ploughed £39.4m into marketing after launching new television advertising campaigns.

Shares lifted 4% after the results came in marginally ahead of expectations.

Investec Securities analyst Martin Deboo said Premier’s outlook was “a decent, reassuring statement in the light of the shenanigans that preceded it”.

“But plenty of challenges remain - the trading environment is tough and marketing investment remains low by peer standards,” he added.

shares

0 comments

Stephen Rose, SSE head of offshore wind generation

The man tasked with ensuring the smooth operation of a £1.6bn windfarm off the Suffolk coast has explained the challenges of overseeing 140 turbines capable of powering half-a-million homes and the contractual “crossroads” his firm faces next year.

Students at UCS in Interior Architecture and Design, have been taking part in a design competition to design an entrance canopy for the St Edmunds House apartments in Rope Walk.
Ross Carroll, director of Crown House Homes, left, with course tutor Dr Liana Psarologaki, and Annali Hubbard of Palmer & Partners estate agents, and some of the course students, Elliott Jones, Bryony Briggs, Dan Hutton, Amy Schuller and Michelle Villar

Apartment developers hold a design competition with university students

A member of staff at N2S bagging up scrap computer components ready for further destruction and recycling.

A Suffolk-based computer equipment lifecycle management company is celebrating after achieving accreditation allowing it to work at the highest level of Government.

Culture Secretary John Whittingdale, left, visiting Ipswich company IJYI.

Culture Secretary John Whittingdale has urged more small and medium-sized businesses in and around Ipswich to sign up to a scheme which provides the funding for the infrastructure they need to get fast broadband connections.

Post Office

The Post Office in a Suffolk town is moving to new premises, and will offer longer opening hours.

Dame Fiona Kendrick:, chief executive of Nestlé  UK & Ireland

Food giant Nestlé has announced plans to close its defined benefit pension scheme, sparking the threat of industrial action.

The Treasury has sold another 1% stake in Lloyds Banking Group.

The taxpayers’ stake in Lloyds Banking Group has fallen to below 16% after the Government sold off another tranche of shares.

The installation of solar panels on the roof of Precision Marketing Group's premises in Lamdin Road, Bury St Edmunds

A Suffolk-based firm will be among the organisations taking part in a nation-wide celebration of solar energy tomorrow.

Candy Gaga'’s Wanda Hewell, right, and daughter, Cherish.

Tower Ramparts in Ipswich now has its very own castle – thanks to the success of a local sweet shop business.

Stansted Airport

A report into the future of Britain’s airports does not rule out a second runway at Stansted – and raises fears of extra night flights to the Essex airport.

Most read

Most commented

Topic pages