Suffolk: Premier Foods hails progress despite first-half loss
PREMIER Foods today hailed its plans to focus on eight key “Power Brands” as a success, despite posting a loss for the first half of 2011.
The group, owner of brands such as Mr Kipling, Hovis, Ambrosia and Bisto, has struggled in recent years under a �1.2billion debt mountain following an acquisition spree.
But it now hopes it is on the mend after sealing a �1.4bn refinancing deal with banks and achieving quicker than expected progress under plans to achieve �40million in cost savings by the end of this year.
The ongoing restructuring meant it recorded bottom-line losses of �27.3m for the six months to June 30, compared with profits of �11.2m for last year’s first half.
However, Premier – which has a factory in Bury St Edmunds and a distribution site at Mendlesham, near Stowmarket – said that trading profits from its eight Power Brands were 3.2% ahead, at �53.2m, on sales 2% up at �418.9m.
Mr Kipling was a particularly strong performer, with the launch of “Great British Fancies” for the Queen’s Diamond Jubilee providing a boost to sales.
Reported sales were 15.1% down, at �852.8m, reflecting disposals since last year’s first half, leaving total operating profit 40.7% lower at �33.6m. However, Premier said that, on an adjusted basis, earnings per share were 35.7% ahead, at 9.5p against 7.0p
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Premier’s other Power Brands include Oxo, Batchelor’s, Sharwoods and Loyd Grossman. It has also a number of non-core brands, including most recently Sarsons vinegar and Haywards pickles.
Chief executive Michael Clarke said today: “I’m pleased with the progress we are making to stabilise the business, re-focus the portfolio and invest in our future growth.
“Our strategy of focusing on our Power Brands is starting to gain traction. Power Brand sales were up 2% and sales of Grocery Power Brands increased by a healthy 4.9%, reflecting consistent improvement in market shares. Trading profit increased 3.2%, in line with our expectations.
“Plans to simplify the business and drive further efficiency and effectiveness are proceeding ahead of plan and we will now deliver the previously announced �40 million savings by the end of 2012,” he added. “As we continue our divestment programme, we plan to take further costs out of the business.
“We remain cautious given the current economic and trading environment and our full year expectations remain unchanged.”