Uniq plans St Ivel disposals to cut £185m debts

The beleaguered foods group Uniq is selling its St Ivel yoghurts and spreads divisions in an attempt to tackle its debt mountain and cut losses as it repositions itself in the faster-growing chilled foods market.

The disposal of the St Ivel businesses, which analysts said could raise up to £100m, will mark the first step on the group's target to cut its debt from £185m to under £100m within the next 12 months.

Uniq has struggled to recover from a series of profit warnings and management mistakes since the old Unigate empire was dismantled.

Bill Ronald, the chief executive who joined three months ago from Mars, said he was at an "advanced stage of discussions" regarding the sale of the loss-making yoghurts division.

"We were well below the economic scale required to be an efficient yoghurt player in the UK. [The business] was an obvious candidate for sale given the strength of [its low-calorie] Shape brand," Mr Ronald said. France's Danone is thought to be leading the bidding for the yoghurts business, which is likely to fetch about £30m.

Mr Ronald said the spreads division, which includes the Utterly Butterly and Vitalite brands, was in better financial health but did not fit the group's move to focus on own-label and franchised operations. He expects to find a buyer by the end of the year.

Analysts welcomed the decision to focus on supplying own-label products in the chilled foods sector, such as sandwiches, desserts and packaged salads. One analyst said the planned disposals were "a sensible move because it is getting out of areas that are either under pressure [yoghurt] or low growth [spreads]".

Mr Ronald, who is Uniq's fourth chief executive in the last 18 months, asked the group's shareholders to give him 12 months to turnaround the business. He said his experience at the US giant Mars had trained him to look "very closely at where the consumer is going and where the money is – it's in chilled convenience food". The group's pre-tax profits before goodwill and exceptional items for the year to 31 March fell to £23.1m from £57.5m. It was dragged down by the poor performance of St Ivel yoghurts and Uniq's French ready-made meals unit.

Post exceptionals, which included a £32m loss relating to the sale of its Malton pig meat unit, pre-tax losses were £115.2m against £118.4m a year earlier. Sales fell 40 per cent £1.37bn.

Its shares rose 2.5p to 173.5p.