Food firm premier in profit warning

The UK's largest food manufacturer today issued a profits warning as it revealed a slump in sales across well-known brands including Hovis.





Premier Foods, which also owns brands such as Indian foods label Sharwood's and Batchelor's soup, said sales volumes had fallen 8% in the three months to September 30. Hovis saw volumes drop 13.5% in the period.



The heavily indebted group, which also owns Ambrosia and Bisto, said it would sell off a number of businesses to focus on eight "power brands" in a bid to drive future growth.



Michael Clarke, Premier chief executive, who took the top post in August, said the trading performance was "significantly below expectations" and the company will not meet last year's profit in the second half as previously expected.









Premier said it was holding talks with lenders to prevent it from breaching agreements - which will be tested at the end of the year - over its debt.

Mr Clarke, who joined the business from Kraft, said he hoped the discussions would "reach a successful conclusion in due course".



Premier said full-year profit expectations were between £214 million and £232 million - but it no longer expected to meet that range. Trading profit in the year to December 31 was £311 million.



The St Albans-based manufacturer also said its net debt would be higher than the £850 million forecast for the full year.



Mr Clarke refused to identify brands which would be up for sale but would not rule out any of the labels outside the so-called "power eight".



Meanwhile, Mr Clarke said a previous price spat with Tesco - which saw the supermarket pull a number of its brands, including Hovis - was still hurting business.







Shares in Premier Foods slumped more than 30% following today's update and have fallen more than 80% since May.

Martin Deboo, analyst at brokers Investec Securities, said: "Now the question is one of whether this company can survive."



He said: "To say that all this adds up to a baptism of fire for new chief executive Mike Clarke feels like the understatement of the year.



"His mettle is going to be strongly tested in the run-up to Christmas."



Consumer goods firm Unilever saw its shares slide in the aftermath, as did Associated British Foods.



Premier built up its debts in a buying spree last year that saw it snap up the likes of Hovis owner RHM. It recently moved to alleviate some pressure by selling off its canning business and meat-free division Quorn.



The company said plans to reduce the scope of its business would see it exceed its cost savings target of £20 million by 2013.



The grocery division, which includes brands such as Branston pickle, Hartleys jam and Birds custard, saw sales volumes fall 6.6%.



Its Brookes Avana business, which makes own-label ranges for supermarkets, saw sales decline 13.2%, after losing a significant pie contract at its site in Leicester.



Mr Clarke said the overall performance of the group depended on the crucial fourth quarter, when many of Premier's brands enjoy strong Christmas sales.

PA

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
PROMOTED VIDEO
Arts and Entertainment
Sir Bruce Forsyth with Tess Daly in the BBC's Strictly Come Dancing Christmas Special
tvLouis Smith wins with 'Jingle Bells' quickstep on Strictly Come Dancing's Christmas Special
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
Sport
sport
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there