Premier Foods has said it expects to meet market expectations for 2007 despite rising raw material and packaging costs.

In a trading update released this morning, the food manufacturer, which owns brands including Branston, Hovis, Oxo and Quorn, said core Premier sales and pro forma group sales rose 3% during the four months to October 2007.

Sales in its culinary brands, cakes and customer partnerships division also reported a 3% increase in sales, but sales in its bread bakeries division were only “moderately ahead” of last year because of price rises.

“While the retail price of our bread has risen we have only recently started to see similar increases in the retail price of other bread brands,” Premier Foods said. “Consequently, we have seen lower volumes and, combined with the impact of the higher wheat prices, trading profit for the division has been significantly lower during September and October than the same period last year.”

The integration of RHM and Campbell's both remained on track and would deliver £17m of incremental trading profit in 2007.

“We anticipate sales volumes will continue to improve as we enter the important Christmas trading period,” Premier Foods added. “We are pleased to have achieved further bread price increases to offset higher wheat costs but we anticipate that our bread volumes will continue to be affected while a disparity in retail prices between the main bread brands continues.”

“November and December are important trading months for the group and we anticipate that we will meet market expectations for 2007.”