UK: Reduced first half loss for Premier Foods

Hovis owner Premier Foods has announced reduced losses

Hovis owner Premier Foods has announced reduced losses - Credit: PA

Loss-making Premier Foods, home to brands includng Mr Kipling and Bisto, boosted its turnaround today by disclosing that it is on track for a better than expected year.

Cost savings and a sixth consecutive quarter of growth for its frontline brands, which also include Ambrosia and Batchelors, meant losses for the six months to June 30 were cut by around half to £23.5million.

Its shares jumped more than 6% after Premier added that profits at a trading level should be around the top of City expectations for the whole of 2013.

Chief executive Gavin Darby, the former telecoms boss who took over after Michael Clarke’s shock exit in January, described the company’s half-year performance as “very encouraging” given the level of competition.

Trading profits rose by 50% to £47.4m, with sales of its key brands up by 4% after a marketing campaign for Ambrosia and Bisto and Oxo reinforced their leading positions in the growing gravy and stock category.

Bread sales reduced by 0.7% to £240.6m but the Hovis-branded division is set to lose £75m in annual sales after opting not to renew a low-margin contract with the Co-operative supermarket chain in late April.

It is restructuring the operation, including through the loss of around 900 jobs by closing bakery sites at Greenford and Birmingham.

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Overall, cost savings worth £20m have been delivered but Premier said it expects an additional £10m will be achieved through a drive to reduce complexity across the organisation.

St Albans-based Premier, which has debts of £890m following a spending spree which included Mr Kipling owner RHM, has sold a number of businesses in the last year, including the Bury St Edmunds-based Branston pickle and Haywards pickled onion operations.

Its cost saving programme includes a number of closures within the Hovis business, including a distribution depot at Mendlesham, near Stowmarket.