Premier Foods has suffered a dramatic fall in first-half profits, as commodity costs and pressure on consumer spending continue to drag down its performance.
The Hovis maker reported a 29% fall in profits for the six months to 25 June to £67m, down from £94m for the equivalent period last year.
Premier blamed the figures in part on its recent pricing dispute with Tesco, when the retailer delisted a quarter of Premier’s branded products. That resulted in a profits warning being issued to the stock exchange in June.
The embattled manufacturing giant also pointed to the underperformance of its own-label division Brookes Avana, which earlier this year lost a major contract to supply Marks & Spencer with pies.
The sale of its meat-free and canning businesses raised £362m, bringing net debt to £972m when the proceeds of the disposals filter through. Logistics and head office restructuring would yield £20m in annual savings by 2013, the company added.
“We were successful in passing on the majority of our higher input costs, completed two significant disposals and reduced our borrowings,” said chief financial officer Jim Smart.
“We have continued to deliver efficiencies in line with our targets and have now commenced a further cost saving programme.”
Premier Foods sells canned grocery operations to Princes for £182m cash (25 July 2011)
Kraft’s Clarke lands top job at Premier (16 July 2011)
Daily Bread: The only way is up (14 July 2011)