Blog: Premier's results unappetising
Dean Best | 19 March 2012
On the face of it, this morning's 2011 financial results from Premier Foods, the UK's largest food manufacturer, make less than appetising reading.
Trading profit down 29%, sales falling year-on-year, and an operating loss of over GBP176m, compared to an operating profit of almost GBP220m in 2010. It was a year in which Premier saw significant change - businesses sold, a new CEO and a refocused business strategy - but it was also another challenging 12 months for the Hovis and Mr Kipling maker.
Premier and CEO Michael Clarke, the former Kraft Foods executive, are trying to look to the future with optimism. The company is focusing on eight so-called "power brands", is planning to continue to offload assets (Hartley's and Haywards are two brands said to be up for sale) and it has a new financing deal that has given it some breathing space.
"We intend to draw a line under the performance of 2011," Clarke said today. "Having put the financing and strategic building blocks in place, our immediate priorities are to implement this re-financing package, continue stabilising the business, re-focus the portfolio and invest in our future growth."
There is, however, some uncertainty around Premier's future. Some analysts are concerned that further disposals could reduce the company's ability to generate cash and mean its pension liabilities grow, relative to the size of the business that is left.
Premier plans to invest in marketing its eight flagship brands but, in this trading environment, it is by no means certain that that investment will pay off. And whether Premier can generate the growth it needs to build a brighter future after the challenges of the last couple of years.
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