In its half-yearly report earlier this month, the UK's largest food producer did its best to reassure investors it had a tight grip on costs and had made good progress in strengthening cashflow and reducing its £1.365bn debt.
It said that figure included a £110m fall in debt and that it intended to generate £100m of cash a year through stock reductions to help cut borrowings further. However, analysts are warning Premier has "a mountain to climb" to put its balance sheet in order.
"It now seems to be admitting that disposals could be a solution, although this is not an easy one either," said Panmure Gordon analyst Graham Jones, adding he remained unconvinced Premier's cash-generation target was aggressive enough.
Meeting the £100m annual debt-reduction target would be a "stiff challenge" given likely working capital volatility, cautioned Investec Securities analyst Martin Deboo, estimating Premier Foods would "just" beat it in the 2010 financial year but might only manage £75m in the next financial year.