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."
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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.
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