Premier Foods puts faith in Power Brands and cost cutting

 Breaking News
  • Scottish Food and Drink Exports Hit Record £6 Billion Overseas Scottish food and drink exports were worth approximately £6 billion in 2017 – almost £570 million more than 2016. Food exports were valued at about £1.6 billion – a rise of 15% (£214 million) during the same period. Exports of food to Europe were worth £1.1 billion after an increase of 13%, or £125 [...]...
  • UK Casual Dining Contraction is Independents’ Opportunity With casual dining brands closing sites and scaling back expansion in the UK, well-run independent operators have an opportunity to take back market share, says buying specialist Lynx Purchasing. Operators who do their homework on the eating-out market, including implementing strong buying disciplines, can broaden their customer appeal, says Lynx Purchasing managing director Rachel Dobson. “Since the [...]...
  • AAK UK Opens First Customer Innovation Centre AAK UK has opened a new Customer Innovation Centre in Hull to take its co-development work with leading food brands to new levels of success. AAK, the UK’s leading manufacturer and supplier of edible oils, fats and semi-speciality oil ingredients, works in close partnership with some of the most famous names in food and bakery to [...]...
  • Marks and Spencer Selects Zetes to Transform Food Supply Chain Operations Marks and Spencer (M&S) has selected Zetes to help transform visibility and fulfilment across its fresh food supply chain. The partnership will also see greater collaboration between M&S and its food suppliers via Zetes’ supply chain visibility platform, ZetesOlympus. Through ZetesOlympus, M&S will gain real-time fulfilment performance insight across its fresh food supply chain. The platform will help M&S [...]...
  • Guinness Remains Ireland’s Most Valuable Brand at €2.1 Billion Guinness remains Ireland’s most valuable brand after growing by 5% over the last year to a brand value of €2.1 billion on the back of new product innovations and steady sales of the world-famous draught, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. Guinness’s brand value has [...]...

Premier Foods puts faith in Power Brands and cost cutting

July 26
11:55 2013

Premier Foods will continue to develop its Power Brands and deliver a further £10M of cost savings this year, according to a statement accompanying its half-year results posted today.

Gavin Darby, chief executive officer, said: “The second half will see further plans to grow our Power Brands, in addition to a new £10M of cost savings that we have now identified from our efforts to reduce complexity.”

The firm now expected full-year trading profit to be “around the top” of market expectations.

Its half-year results
revealed Power Brand sales up by 4% – registering six successive quarters of growth for the key brands, which were picked out to remedy the firm’s plunging profitability.

Darby has backed his predecessor Michael Clarke’s plan to stake Premier Food’s recovery on the success of the power brands: Hovis, Mr Kipling, Bisto, Oxo, Ambrosia, Batchelors, Sharwood’s and Loyd Grossman.

Pre-tax loss of £23.5M

But, Premier Foods made a pre-tax loss of £23.5M, after allowing for restructuring costs and interest payments. The result compared with a losses of £45.8M in the same period of last year.

Underlying business trading profit was up 50% to £47.4M. Recurring cash flow guidance for this year was lifted to between £50M and £70M.

Darby hailed the 50% increase in trading profit is a “very encouraging result” given the highly competitive environment.

“This shows that our turnaround strategy is delivering at the bottom line,” he said. “We have now grown sales in our Grocery Power Brands for six consecutive quarters, as we continue to build partnerships with our customers, deepen our understanding of consumers and invest more effectively in supporting our brands.”

£20M of overhead cost savings

The firm had completed the actions to deliver the promised £20M of overhead cost savings for 2013 and continue to keep a tight control over costs. “The restructuring of our bread and milling business is ahead of plan and we are taking the decisions necessary to create a more sustainable platform for this business,” he added.

Last month, the firm axed 43 jobs at its Barry mill in the Vale of Glamorgan.

The sale, accompanied by plans to restructure the milling business in two parts, positioned it for sale, said Investec analyst Martin Deboo. “Premier could either sell the third-party milling business – which is what ABF did to ADF 15 years ago – or sell the whole milling business,” Deboo told FoodManufacture.co.uk last week.

Meanwhile, Darby pledged to continue driving profitable top-line growth, by focusing on growing categories alongside further cost savings generated by reducing complexity.

Disposals this year had allowed the debt-laden firm to cut net debt from £950.7M at the start of the year to £890.4M.

“At the right time, we will address our capital structure – from a position of growing strength given the delivery of our turnaround plan and the performance of our Power Brands,” said Darby. “I am excited by the potential offered by Premier Foods in the longer term.”

For more breaking news on the fast-moving world of food and drink manufacturing, subscribe to our free newsletter, delivered every Monday, Wednesday and Friday.

About Author



Related Articles

Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • March 18, 2018ProWein
  • March 21, 2018World Olive Oil Exhibition
  • March 28, 2018FOOD INDUSTRY
  • April 4, 2018The leading event for the snack and food-on-the-go market
AEC v1.0.4

Jobs: Food Packaging

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber

Subscribe Here