Premier Foods suffers after Hovis slump
Monday 19 March 2012
The maker of Hovis slumped to a loss today after a price war cut its bread division's profits to just £3.4 million last year.
Premier Foods, which also owns Mr Kipling, Bisto and Oxo, was pushed to an overall loss of £259.1 million in 2011 because of the need to write down the value of the Hovis business on its balance sheet.
Bakery sales were down nearly 3% at £500.5 million as fierce price activity in a market that also includes Kingsmill continued. Tesco also refused to stock Hovis products, although this price dispute has now been settled.
St Albans-based Premier said the division's trading profits slumped 90.4% last year, leading it to slash the value of the bread arm by £282 million.
The group, which has been struggling under a near £1 billion debt mountain following a spending spree that included Mr Kipling owner RHM, insisted it is on the mend after recently sealing a "landmark" £1.4 billion refinancing deal.
Chief executive Michael Clarke said he was "very positive" about Premier's future, adding that sales growth should return under plans to double market spend on eight core brands this year, which also include Batchelors and Ambrosia.
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