Premier Foods to cut 900 jobs with Bread overhaul

The UK's largest food producer, Premier Foods, is set to get a little smaller after announcing on Tuesday that it is to close two bakeries in the UK next year, leading to the loss of around 900 jobs.

The UK's largest food producer, Premier Foods, is set to get a little smaller after announcing on Tuesday that it is to close two bakeries in the UK next year, leading to the loss of around 900 jobs.

The company has proposed closing two bakery sites in Greenford and Birmingham over the course of next year. This follows the previously-announced closure of the Eastleigh bakery. Production from these locations will be consolidated into its remaining bread-making sites.

"Premier Foods today announces a further step to build value in its Bread business and drive sustainable profitable growth through simplifying its manufacturing and distribution operations to improve efficiency, quality and service levels, so enhancing the performance of the Hovis brand."

In addition to the closures, Premier Foods will remove around 130 distribution routes from its network, following the loss of a large bread contract with an unknown "retail customer" announced in October. This accounted for around £75m of annual sales but the firm assured that it was a low-margin contract and costly to service.

The distribution shake-up means that its operations in Greenford, Birmingham, Mendlesham and Plymouth will also shut down.

"Together, these proposals are expected to result in approximately 900 fewer jobs across the company's Bread Division," the company said.

Premier Foods will take a one-off charge of £28m related to the restructuring which will be realised in its 2012 and 2013 financial statements.

Commenting on the proposals, the Chief Executive Officer Michael Clarke said: "Having generated solid growth momentum in our Grocery Division, it is critical that we act to assure the long-term future of the Bread Division. By simplifying our cost base, we can increase focus on improving efficiency, quality and service levels to help grow our core Hovis business.

"We recognise the impact these actions will have for our employees at the sites affected. Decisions will not be taken lightly but they are necessary if we are to build a strong and successful future for the Bread Division and those who remain with our business".

A brand 'clean-up' over the past few months has seen the company sell off its vinegar, pickles and jam businesses in an effort to bring down debt, which stood at nearly £1.3bn at the half-year stage. This has been reduced by around 30% since after the company sold several of its well-known brands such as its Robertson's jam and Sarson's vinegar.

Recommended

The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves takes a look at the companies with the highest dividend yields in the UK’s blue-chip index
6 Feb 2023
The outlook for Shell shares is mixed, despite bumper profits
Energy stocks

The outlook for Shell shares is mixed, despite bumper profits

With profits surging, it looks as if Shell is on a roll, but the company’s growth from here is hard to see as Rupert Hargreaves explains.
6 Feb 2023
The top funds to invest in
Funds

The top funds to invest in

As market volatility and recessionary fears continue, here are the most popular funds, stocks and trusts investors are putting their money into accord…
2 Feb 2023
The top ten dividend stocks in the FTSE 250
Share tips

The top ten dividend stocks in the FTSE 250

The average FTSE 250 dividend yield is around 4%, but many stocks yield much more. Rupert Hargreaves picks the best FTSE 250 stocks for income investo…
17 Jan 2023

Most Popular

NS&I brings back one-year fixed bonds with highest rates since 2010
Personal finance

NS&I brings back one-year fixed bonds with highest rates since 2010

NS&I’s one-year fixed bonds are back on sale after being pulled off the market in 2019 - but is the rate any good?
1 Feb 2023
The best one-year fixed savings accounts - February 2023
Savings

The best one-year fixed savings accounts - February 2023

Earn almost 5% on one-year fixed savings accounts.
6 Feb 2023
Will energy prices go down in 2023?
Personal finance

Will energy prices go down in 2023?

Wholesale gas prices are on a downward trajectory, but does this mean lower energy bills later this year?
6 Feb 2023