Premier cuts promotional spend to focus on integration

Premier Foods, owner of Branston Pickle, Hovis and Mr Kipling, will scale back promotional activity over the first half of 2008 as it introduces new IT and software systems across its three new divisions and continues integrate its businesses.

The group, Britain’s largest food company, announced the plans as it reported a 167.3% rise in group sales for the 12 months to December 31 although it has been forced to halve its dividend to shareholders as its struggles with debt and cost inflation.

It says that it “moved quickly” to raise prices to combat an increase in the cost of raw materials but that there is “inevitable time lag”, which hit profits in the second half.

Premier also announced a 95.8% increase in operating profits to £234.8m, which it says was driven by Campbell’s and RHM, the food groups it has acquired over the last three years. It adds that it has made “significant progress” integrating the two companies.

It has closed the RHM head office and combined the management team into one single operation board and closed two factories and plans to close a further seven.

It adds that it has completed a review of its bread business and is currently investing in new equipment and recipe changes in a bid to grow volumes.

Meanwhile, Premier has also negotiated a revision of its banking facilities to give it the “financial headroom” to continue with its planned investments programme over the coming year.


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