Premier Foods is set to cut 600 jobs in the latest move by the embattled conglomerate to get back into growth.
The cuts represent around 5% of its 12,000-strong workforce and are designed to free up funds to invest in the company’s recovery plan. Premier announced the cuts, which are subject to a consultation, in a trading update issued today.
The company said it planned to double marketing spend behind its eight power brands: Hovis; Ambrosia; Mr. Kipling; Sharwood’s; Loyd Grossman; Bisto; Oxo; and Batchelors. Six new adverts will hit TV screens during the first quarter of the year.
Premier said it expected to more than double its original cost reduction target, set in October, from £20m to over £40m by 2013.
To support the plans, the company this morning said it had accelerated the divestiture of non-core businesses, including the completion of the sale of its Brookes Avana own-label business and the agreement to sell its four Irish grocery brands in recent weeks. Further “selected” disposals will follow this year to help deleverage the business.
Premier warned that its results for 2011 would fall “at the lower end of current market expectations” and said discussions with its lenders over a refinancing package were ongoing.
“While decisions to reduce the workforce are always difficult, I’m convinced we are taking the right steps in the long-term interests of the business, employees and our stakeholders,” said chief executive Michael Clarke.