Shares in Premier Foods plc jumped this morning (15 February) after the UK’s largest food group said its trading profit rose in 2010, although the company’s sales fell and it posted pre-tax losses of GBP98m (US$157.7m).
The company posted a 0.6% increase in trading profit to GBP311m, with profits from its grocery and Hovis bread businesses improving.
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However, sales in 2010 dropped 3.5% to GBP2.57bn due to falling own-label sales. Premier also posted a continuing pre-tax loss of GBP98m after a goodwill impairment charge from its Brookes Avana division.
Nevertheless, CEO Robert Schofield said 2010 had been “an important year in the history of Premier Foods”.
He pointed to the progress made on Premier’s financial strategy, which had seen the business close out its interest rate swap, close its final salary pension scheme and increase its recurring cash flow.
Schofield, who has faced pressure to reduce Premier’s debts in the last 12 months, said: “Since the end of the year we have also agreed the sale of two businesses which will reduce our debt level to less than GBP900m, compared to GBP1.37bn a year ago.”
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By GlobalDataHe added: “Our business has proved resilient, with branded volume market share growth, increased margin from procurement and manufacturing efficiency and lower operating expenses. There is more to do in each of these areas and we have aligned the organisational structure behind the strategy of growing our brands.
“We would expect our focus to enable the group to show progress from our new base after the disposals without a further deterioration in the consumer environment.”
Shares in Premier were up 6.3% at 23.5p at 09:13 GMT this morning.
Click here for the full statement from Premier and click here for coverage of the company’s conference with City analysts.
