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.

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

Recommended

Ocado faces a “crunch” year – should you buy or avoid?
Share tips

Ocado faces a “crunch” year – should you buy or avoid?

Ocado was one of the big winners from the pandemic as customers moved online. But now it’s struggling, and losses are growing. So, asks Rupert Hargrea…
27 May 2022
What to buy as the tech-stock bull market crashes
Tech stocks

What to buy as the tech-stock bull market crashes

The decade-long bull market in tech stocks has come to a rapid halt. Investors need to distinguish solid stocks from speculative ones rather than just…
27 May 2022
Share tips of the week – 27 May
Share tips

Share tips of the week – 27 May

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
27 May 2022
Marks & Spencer shares look cheap – should you buy in?
Retail stocks

Marks & Spencer shares look cheap – should you buy in?

Marks & Spencer shares have been a disappointment for investors for two decades. But with the company now on something of a comeback, Rupert Hargreave…
25 May 2022

Most Popular

The world’s hottest housing markets are faltering – is the UK next?
House prices

The world’s hottest housing markets are faltering – is the UK next?

As interest rates rise, house prices in the world’s most overpriced markets are starting to fall. The UK’s turn will come, says John Stepek. But will …
23 May 2022
The Federal Reserve wants markets to fall – here’s what that means for investors
Stockmarkets

The Federal Reserve wants markets to fall – here’s what that means for investors

The Federal Reserve’s primary mandate is to keep inflation down, and lower asset prices help with that. So, asks Dominic Frisby – just how low will st…
25 May 2022
Scottish Mortgage Investment Trust has fallen hard. But is now the time to buy?
Investment trusts

Scottish Mortgage Investment Trust has fallen hard. But is now the time to buy?

After a spectacular couple of decades, the Scottish Mortgage Investment Trust has fallen by almost 45% so far this year. Rupert Hargreaves asks if no…
26 May 2022