Premier Foods has reported rising sales for the third quarter.

Total sales from ongoing businesses, excluding milling, were up 2% in the three months to 30 September to £364.7m. Sales of its eight best-selling ‘power brands’ grew 2% to £206.1m, while its non-core ‘support brands’ saw sales fell 4.1% to £82.9m.

Among the power brands, Premier singled out Ambrosia for delivering growth in the quarter, driven by its new Rice Pots range, while Oxo sales increased significantly and Batchelors continued a strong performance thanks to its new Deli-Box range.

Non-branded sales were up 9.7% to £75.7m, which Premier said reflected contract wins for cakes and pricing benefits.

Premier also reported that it had lost an own-label bread contract worth £75m. The loss will take effect from mid-2013 and so will not affect 2012 performance. Premier said it was unable to renew the very low-margin contract in order to follow its policy to improve sustainable profit in bread. It said it was successful in passing on price increases to customers to offset wheat price inflation in the quarter, while sales and market share of Hovis increased during the quarter.

“I’m delighted that we’ve grown sales of our grocery power brands for a third successive quarter despite the challenging consumer environment,” said CEO Michael Clarke. “This underlines the substantial progress we have made this year in stabilising the business and delivering against our strategic priorities. Following recent divestitures we expect to deliver a further £20m of overhead cost reductions in 2013, over and above the £40m of savings we will deliver in 2012.

“We intend to build on this progress as we continue to drive momentum behind our grocery power brands particularly through capturing opportunities in the growing convenient meals and snacking segments. We are also continuing our work to unlock the value in our bread business, through taking the necessary decisions to improve sustainable profitability. We have a solid programme in place for the important Christmas trading period and our full-year expectations are unchanged.”