UK: Cost pressure to continue, says Premier
Premier Foods, the UK's largest food group, saw its shares tumble today (10 January) after it warned of continued cost pressure throughout 2008.
The company, which makes brands including Branston pickle and Quorn meat-free products, said it had seen "significant cost pressures" in 2007, particularly on wheat.
"We expect the market to remain highly competitive in 2008 with input cost inflation continuing to be a factor," Premier said in a trading update.
Shares in Premier stood at 170p, a fall of over 9.5%, at 13:12 this afternoon.
The company said full-year revenue had risen 1.4% on a pro forma basis after a revival during the second half of the year when sales rose 3%.
CEO Robert Schofield said: "After a slow first half, we have seen sales growth improve during the second half, although this has been held back by the decline in retailer branded sales in the core Premier business."
Retail own-brand sales slumped 8% in the second half of the year amid fierce competition among UK supermarkets.
The Hovis bread maker said that sales from its bakeries business had risen by 6% during the second half of the year. However, Premier warned that profits from that side of the business had been hit amid rising wheat costs and the higher price of Hovis against its competitors.
Premier added that costs linked to its recent acquisitions of RHM and Campbell's UK and Irish businesses remained in line with expectations.
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