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Premier Foods upbeat after annus horribilis

Debt laden food manufacturer Premier Foods said it expects to make progress in the year ahead, despite persistently challenging markets, as it posted an increase full year underlying trading profit.

Debt laden food manufacturer Premier Foods said it expects to make progress in the year ahead, despite persistently challenging markets, as it posted an increase full year underlying trading profit.

Underlying trading profit, which excludes all disposals announced in 2011 and 2012, rose 10.6% to £123.4m. Permier Foods sold Sarson's vinegar and Branston pickle in 2012 to help reduce debts of £1.3bn.

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The owner of the Hovis, Mr Kipling and Loyd Grossman brands, said adjusted pre-tax profit from continuing operations rose to £85.2m in the year ended December 31st 2012 from £72.6m a year earlier. Annual sales fell 12.2% to £1.8bn.

Premier Foods had an eventful 2012 including the surprise resignation of CEO Michael Clarke in January after just 18 months in the job. Last month Gavin Darby was named as its new CEO.

Premier also underwent an overhaul at its Bread division with two UK bakeries earmarked for closure, resulting in the loss of around 900 jobs. Premier also removed around 130 distribution routes from its network after losing a big bread contract with a retail customer.

The St Albans-based firm said after a tough 2012, it believes with the right strategies in place, it expects to make further progress in 2013.

For the year ended December 31st the Bread division's contribution to the group as a whole declined by £24.8m to £26.9m as it grappled with higher costs and poorer British wheat quality after last year's washout summer.

Grocery's contribution fell by £11.4m to £195.5m during the year, as it increased marketing investment.

Power Brand sales, which include Batchelor's, Lloyd Grossman, Bisto, Ambrosia, Hovis, Mr Kipling, Oxo and Sharwood's, were up 2.1%.

Chief Executive Officer Gavin Darby commented: "It's important now to maintain continuity and focus on executing our existing strategies to build further momentum in Grocery while re-building value in Bread."

Chief Financial Officer Mark Moran added: "In 2012 we delivered against all of our strategic priorities - reducing net debt levels, significantly reducing costs, building more collaborative customer partnerships and generating growth in our Power Brands."

"While it's clear that markets will remain challenging in 2013, we believe we have the right strategies in place, including the delivery of further overhead cost savings, to make further progress this year."

Net debt was reduced to £950.7m.

CJ

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