Premier Foods has reported a full-year pre-tax loss of £73.5m against profit of £59m the year before, on turnover up 167.3% at £2.2bn.

The food manufacturer, which makes brands including Branston Pickle, Oxo stock cubes and Crosse & Blackwell cooking sauces, blamed the loss on the “exceptional level of cost inflation that we and other food companies have faced”.

“While we have moved quickly to raise prices, the inevitable time lag between cost increases and raising prices reduced second-half profitability and has caused temporary market imbalances as seen by our bread division,” Premier said.

By December, Premier said it had recovered £190m of the £225m costs and expected to recover the rest in the first quarter of 2008. However, this time lag would reduce trading profit in its core Premier division by £10m, it warned.

Premier also warned trading profit in its bread division, which makes Hovis, would be lower during the first-half of the year because of lower volume levels and investment in recipe changes.

It also slashed its dividend from 12p to 6.5p, but said it had “negotiated a revision to our banking covenants and agreed additional banking facilities”.