Suffolk: Premier Foods signals sell-off after profits warning
BRITAIN’s biggest food manufacturer yesterday signalled the sale of some of its brands as it issued a profits warning following a slump in sales.
Premier Foods, which operates from nearly 50 sites across the UK, including two in Suffolk, said sales volumes had fallen 8% in the three months to September 30.
The group, which is heavily indebted following a succession of acquisition deals, said it planned to sell off a number of businesses in order to focus on eight “power brands” which offered the greatest potential for future growth.
Premier also said that its net debt would be higher than the �850million forecast for the full year, and that it was holding talks with lenders to prevent it from breaching agreements over its debt which due to be tested at the end of the year.
Chief executive Michael Clarke, who took up the job in August, said the trading performance was “significantly below expectations” and the company would not match last year’s profit in the second half as previously expected.
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Premier was previously forecasting full year profits of between �214m and �232m but no longer expects to meet that range. Trading profit for 2010 was �311m.
Premier’s operations include a factory in Bury St Edmunds which produces Loyd Grossman cooking sauces, Branston pickles and Haywards pickled onions, as well as own-label products for supermarkets Tesco, Asda, Sainsbury’s and Morrisons, and a Hovis bread distribution site at Mendlesham, near Stowmarket.
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Hovis and Loyd Grossman both feature among the key brands on which Premier plans to focus, together with Ambrosia, Batchelor’s, Bisto, Mr.Kipling, Oxo and Sharwood’s.
Mr Clarke declined to identify brands which would be up for sale but would not rule out any of the labels outside the so-called “power eight”.
Volumes within the Hovis business were down 13.5% in the third quarter, amid a continuing price dispute with Tesco, while the grocer division, which includes brands including Branston, saw volumes fall 6.6%.