Premier to cut 600 jobs to double annual cost savings

Premier Foods, the manufacturer of Hovis, Bisto and Oxo, is to shed 600 jobs as its new management plans to more than double annual cost savings to £40m by the end of 2013.

The jobs are largely expected to go from administrative posts including at the group's headquarters in St Albans.

Michael Clarke, the former boss of Kraft in the UK who became chief executive last September, said: "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."

Premier reported it is focusing on eight key brands in the future: Hovis, Ambrosia, Mr Kipling, Sharwood's, Lloyd Grossman, Bisto, Oxo and Batchelors.

It has already sold Quorn, its East Anglian canning business, its Irish brands and ready meal maker Brookes Avana, which services Marks & Spencer.

The Hartley's jam and Haywards pickles brands are also up for sale with a likely combined price tag of more than £200m.

Premier also warned that although sales over the key Christmas period had been in line with its expectations, trading profits for the year are now likely to come in at the lower end of the current range of forecasts which had been between £170m and £198m.

But the City welcomed yesterday's news, with Charlie Mills of Credit Suisse describing it as "a message of steely resolve".

Premier said it is still in discussions with its banks over a refinancing, which it hopes "will be reached soon".