Premier Foods plc has booked a 29% drop in full-year profits and said it expects the consumer environment to remain challenging in 2012, impacted by continued high levels of promotional activity and cost inflation.

For the 12 months to the end of December, Premier made a trading profit of GBP173.7m (US$275.2m), down from GBP245.7m last year, due to the need to write down the value of its Hovis business. Bakery sales were down 2.9% at GBP500.5m, while the division’s trading profit slid from GBP35.3m in 2010 to GBP3.4m.

Last month, the Mr Kipling maker closed one of its Hovis bakeries as part of “ongoing efforts to improve the utilisation and cost effectiveness of the Hovis supply chain”, resulting in 82 job cuts.

For the 12-month period, Premier made an operating loss of GBP176.3m, compared to an operating profit of GBP219.9m in the prior-year. Sales in the period slumped 10.5% to GBP1.99bn.

Sales for ongoing business, excluding the impact from disposals, declined by 3.4% reflecting the “challenging consumer environment and the effect of previous customer disputes”, Premier said.

The group also confirmed that it had received backing from its banks and pension scheme partners for a four-and-a-half year re-financing package which will extend its bank facilities of GBP1.4bn until June 2016.

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Faced with high debts and in the wake of two profit warnings in 2011, Premier, under new CEO Michael Clarke, has been offloading assets to strengthen its balance sheet and refocus the business.

The CEO said today that Premier was delighted at having been able to reach “a positive outcome” with its banking and pension scheme partners.

“The consent for this re-financing package represents a strong sign of confidence and support for the business, its strategies and growth plans,” Clarke said. “This is great news for our employees and all of our stakeholders.”

He added: “We intend to draw a line under the performance of 2011. 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.”

Despite the losses, Clarke said its performance thus far in 2012 is “in line with our expectations”.

“I’m convinced we have the right team to turn this business around and I am very positive about our future.”

Premier Foods‘ share price slid 5.21% to 5.21 pence at 09:45 GMT today.