The management merry-go-round at the UK’s largest food group, Premier Foods plc, continued today (8 December) with the company announcing the creation of yet another new role.
Jon Goldstone, marketing director for Premier’s Hovis bread business, will become group marketing director in the New Year, the company announced this afternoon.
News of Goldstone’s appointment follows hot on the heels of the hiring of former Burton’s Foods chief executive Paul Kitchener to another new position – technical and innovation director – and yesterday’s announcement that Premier had created a role of chief operating officer.
Tim Kelly, chief operating officer for Hovis bread and Premier’s chilled division, will become group COO and take on responsibility for the brands and commercial operations of Hovis and the company’s grocery business, which includes products like Bisto gravy and Sharwoods cooking sauces.
Kelly will report directly into chief executive Robert Schofield and his appointment as COO in charge of Hovis and grocery means Will Carter, MD of Premier’s ambient grocery division, will leave the business. Premier’s chilled arm, which Kelly was running, will report to Schofield.
The changes to Premier’s management structure only add to the intrigue surrounding the company, which is said to be facing investor pressure to cut its debt (at the end of June, this stood at over GBP1.3bn) and is in talks to sell off its canning operations in East Anglia and its meat-free business, which includes the Quorn brand.
There have been questions in the industry over Schofield’s management of Premier, particularly since the company’s acquisitions of UK own-label giant RHM and Campbell Soup Co.’s UK and Irish operations in 2006 and 2007.
The deals gave Premier scale but they also landed the company with a manufacturing base that needed major restructuring and with pressure on its balance sheet.
In 2008, Premier embarked on a major manufacturing review that led to 13 plants being closed. The closures meant the company’s remaining facilities had to readjust to taking on more capacity, leading to short-term production inefficiencies that were still being felt throughout 2009.
The acquisitions also put financial pressure on Premier, pressure that was exacerbated by the commodity price hike of 2008 and led to the levels of debt that has caused anxiety among investors and, ultimately, has led to the company’s share price languishing at the level it does today. One unnamed City analyst said today that Schofield had “destroyed shareholder value”.
In 2008, Premier’s debt reached GBP1.8bn, prompting the Mr Kipling maker to launch a share issue and strike a fresh agreement with lenders to give it some breathing space.
However, the lending agreement only provides Premier with a short window to improve the underlying performance of the business and, with investors like US private-equity firm Warburg Pincus now on the share roster following the rights issue, Schofield is likely to be facing severe pressure to revitalise the business.
All this, combined with the appointment of former Kraft Foods executive Ronnie Bell as chairman in October, provides a probable backdrop for the talks to sell the canning operations and the meat-free business, and the executive revamp announced over the last week.
Premier’s announcements of the executive changes have talked of “accelerating branded growth” and “reinvigorating our brands through accelerated innovation and increased marketing investment”.
The group’s sales appear in need of a boost. During the three months to 30 September, Premier’s branded sales fell by 0.5% in value terms. The value of the market share held by Premier’s brands also dropped, dipping 0.3 percentage points to 24% in what the company called an “increasingly challenging environment”.
In February, Schofield announced plans to revitalise Premier’s branded portfolio, by splitting it into three – “drive”, “core” and “defend”. Analysts cautiously welcomed the move but Shore Capital’s Darren Shirley then told just-food that the move harked back Schofield’s decision in 2006 to divide the stable into three, terming brands “drive”, “core” and “classic”.
In the three months to the end of September, the sales of Premier’s “drive” brands rose 3.9% in value terms, so the company could point to some success but, fundamentally, the business is focused on categories that are either fiercely competitive (bread) or showing few signs of serious growth (ambient).
The management changes are, the unnamed analyst, “logical” given the size of Premier’s business. However, the analyst wondered whether the move was part of a continuing trend at Premier, which sees the business reaching for a solution after other ideas have failed. “It feels like there is a constant tinkering at Premier,” the analyst said.
Whether Schofield’s management reshuffle does pay remains to be seen but it is disposals rather than changes to the executive team that will really appease investors, calm fears over Premier’s balance sheet and get the share price moving again.