Premier Foods reports 3% increase in H1 profit

UK-based Premier Foods has reported that its trading profit from ongoing business increased 3% to £72.2m for the first half ended 30 June 2012, compared to £70.1m in 2011, due to the strong performance of its power brands.

Trading profit from underlying business, which excludes costs for restructuring, pensions and refinancing, grew 3.2% to £53.2m, compared to £51.5m in 2011.

Sales from ongoing business during the first half decreased 2.3% to £852.3m, while sales from eight ‘power brands’, which include Hovis, Mr Kipling, Ambrosia, Sharwoods, Oxo, Loyd Grossman, Bisto and Batchelors, increased 2% to £418.9m.

The company noted that it is making progress in stabilising its business, investing in future growth, and its plan to focus on power brands is showing a positive impact.

Premier Foods chief executive officer Michael Clarke said that the company is set to achieve savings of £40m by the end of 2012, and will continue its divestment plan to further lower costs.

"We remain cautious given the current economic and trading environment and our full year expectations remain unchanged," Clarke added.

Premier Foods is struggling with a debt of £1.3bn, which was built up through acquisitions of a number of brands including Homepride and Fray Bentos.

In March 2012, the company renegotiated its bank debt, and received an extension for its repayment deadline from 2013 to 2016.

To lower its debt, Premier Foods is focusing on eight power brands and divesting select businesses – in July 2012, it sold its Elephant Atta ethnic flour business to Westmill Foods for £34m and divested its vinegar and sour pickles business to Mizkan for £41m.

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Image: Premier Foods’ trading profit from ongoing business increased 3% to £72.2m for the first half ended 30 June 2012, due to the strong performance of its power brands. Photo: Premier Foods.