Premier Foods plc has announced plans to cut around 5% of its workforce as its bid to lower costs continues.
Faced with high debts and in the wake of two profit warnings in 2011, the UK’s largest food maker, under new CEO Michael Clarke, has been offloading assets to strengthen its balance sheet and looking to refocus the business.
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Premier, which produces brands such as Ambrosia, Hovis and Mr Kipling, revealed last year that it had negotiated breathing space on its debts. Talks over a plan to refinance its debts continue and Premier expects to reach a deal soon.
However, after selling its Brookes Avana and Irish businesses in December, the company is looking to reduce costs further to, it said today (17 January) “reflect the smaller size of the business”.
The firm had been working towards a previously-announced GBP20m (US$30.8m) cost saving target by 2013. That target has now doubled to create a “stronger and more efficient business” to release funds to invest in its recovery plans, including its eight “power brands”, which also include Oxo and Batchelors
Premier said around 5% of its workforce – or 600 jobs – would be cut throughout the year.
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By GlobalData“We continue to deliver on our plans to stabilise the business and invest in our recovery and future growth,” Clarke said. “While decisions to reduce the workforce are always difficult, I’m convinced we are taking the right steps in the long term interests of the business, employees and our stakeholders.”
Premier also said it would look to sell off more “selected businesses” in 2012 to increase its focus on the eight “power brands” and “de-leverage” the company.
Last week, there was speculation that the company is planning to sell its Hartley’s jams and Haywards pickles businesses as part of its bid to bring its debts under control.
The company, meanwhile, plans to double its marketing spend behind the eight brands in 2012, with six to benefit from television advertising in the first quarter, spearheading a programme of product innovation and promotions throughout the year.
Premier will publish its full-year earnings results and a company business plan at the end of March. However, it also today provided an update on Christmas trading. Premier said trading had been “in line with expectations”, which, it admitted, would lead its overall 2011 financial results “to be at the lower end of current market expectations”.
Premier’s share price climbed by 13.6% to 6.52 pence at 09:59 GMT today.
